About one-fifth of Vodafone Group Plc is now owned by its rivals — with Liberty Global Plc taking a surprise 4.9 per cent stake. The company’s growing roster of strategic shareholders is ratcheting up pressure to find ways to boost the value of the stock.
Liberty said Monday it had acquired the holding, which it described as an “opportunistic” bet that the stock is undervalued. Vodafone shares have fallen about 28 per cent in the past 12 months — hitting their lowest level since 1997 in December — and it recently ousted its chief executive officer.
Liberty Global is the latest strategic investor to build a stake, joining French billionaire Xavier Niel, who runs the carrier Iliad and owns about 2.5 per cent, and Abu Dhabi’s Emirates Telecommunications Group Co., which owns 13 per cent.
Liberty’s stake shows that there “seems to be a growing body of shareholders in favor of a breakup of some assets,” Credit Suisse Group AG analyst Jakob Bluestone said in a note. Niel has said Vodafone needs to streamline and sell infrastructure, and last year bid unsuccessfully for Vodafone’s Italian unit.
Meanwhile Bloomberg previously reported that Emirates Telecommunications has explored investing in Vodafone’s African business. Vodafone shares rose 4.4 per cent to 98.12 pence in London trading at 2:54 p.m. on Tuesday.
Liberty Global CEO Mike Fries and Chairman John Malone have worked with generations of Vodafone management including current interim CEO Margherita Della Valle, who’s been with the company for almost three decades.
Liberty said it isn’t considering an offer for Vodafone or seeking a board seat, saying it bought the shares because it believes “that Vodafone’s current share price does not reflect the underlying long-term value of their operating businesses, or their announced consolidation and infrastructure opportunities.”
Vodafone declined to comment on the holding. Della Valle said during her first earnings report in the role last month that Vodafone needed to “do better.”
In the past, when Vodafone was searching for strategic deals to reignite growth, the company held talks about a series of potential transactions with Liberty.
In 2015, after months of talks about combining their businesses, discussions were called off after the companies failed to agree on price and structure. The corporate cultures had clashed with Vodafone’s more conservative, dividend-focused priorities colliding with Malone’s appetite for risk and debt.
Still, in the last decade the two groups have reshaped European telecoms with major deals. In 2019, Liberty sold Vodafone its German and eastern European businesses for €18.4 billion ($19.7 billion), which is now Vodafone’s biggest source of profits, though also a source of consternation for management.
Vodafone and Liberty share a 50-50 joint venture in the Netherlands called VodafoneZiggo, while competing in the UK and Ireland.
In 2015, Malone told Bloomberg a combination with Vodafone would be a “great fit” and compared it to “a big banana in the jar.” “The question is: how do you get your hand out of the jar with the banana?” he said.
