Vodafone partners with its principal investor

Vodafone has formed a strategic alliance with its largest shareholder – a UAE based telecoms firm.

Emirates Telecommunications Group (e&), which owns a 14.6% stake in Vodafone will become a “cornerstone shareholder” and seek to consolidate services, technology and infrastructure, and procurement, as part of a more close relationship. In the deal, the company’s boss will join Vodafone’s board.

This comes just a week after Vodafone promoted Margherita Dela Valle to the position of chief executive. The company also promised to start a “necessary” transformation for its struggling group.

Vodafone is a global telecoms group based in Newbury (Berkshire). It sells mobile, landline and broadband services, as well as TV. The company has struggled to grow in a highly competitive market, despite large debts.

It announced in December that Nick Read would be leaving his position as CEO , following a 44% drop in the share price of the company since he was appointed four years ago.

This new relationship is a result of e& becoming Vodafone’s biggest shareholder a year ago. The Middle Eastern group stated at the time it supported Vodafone’s leadership and strategic direction and had no intentions of seeking a seat on Vodafone’s board or making a buyout offer.

Hatem Dowidar will, under the agreement, join the Vodafone Board as a nonexecutive Director. Dowidar was previously the chief of staff to former Vodafone chief executive Vittorio Collao, and head of Egypt’s business.

Abu Dhabi’s investor may also nominate a non-executive second director, if his shareholding exceeds 20 percent. Both sides agreed that e& would not increase its stake beyond 25 percent and would not sell more than 3% a year in the next two-year period. They also agreed to refrain from requesting shareholder meetings or submitting resolutions. The parties agree not to make disparaging comments about each other or former and current directors.

Della Valle said that she has been working at Vodafone for nearly 30 years. “This closer aligning allows us to take advantage of opportunities in our respective market and adds additional telecoms expertise to our board.”

Dowidar stated that e& has “full faith” in Della Valle’s leadership capabilities. He said, “We’re convinced that our relationship with Della Valle will open up new opportunities for both of our companies.”

In recent months, the group has drawn large investors and is looking to consolidate on a number European markets in order to boost growth, return of investment and share prices. The group is in late-stage discussions with Three UK about a possible merger in Britain.

Jean-Francois Van Boxmeer is the chairman of Vodafone’s Board. He was previously CEO of Heineken. Simon Segars is the former CEO of Arm, Michel Demare is the new Chairman of AstraZeneca, and Lord Carter Barnes, former Ofcom chief and Labour Minister, who now heads Informa.

Both sides are planning to offer cross-border digital services, such as mobile, cloud-based, and cybersecurity, for both multinationals and public sector clients. They could share procurement, provide joint access to infrastructure and collaborate on new technologies.

The London Stock Exchange closed at 91p after Vodafone announced its full-year earnings on Tuesday. Shares fell 1 3/4p or 1.9 percent.

Post Disclaimer

The following content has been published by Stockmark.IT. All information utilised in the creation of this communication has been gathered from publicly available sources that we consider reliable. Nevertheless, we cannot guarantee the accuracy or completeness of this communication.

This communication is intended solely for informational purposes and should not be construed as an offer, recommendation, solicitation, inducement, or invitation by or on behalf of the Company or any affiliates to engage in any investment activities. The opinions and views expressed by the authors are their own and do not necessarily reflect those of the Company, its affiliates, or any other third party.

The services and products mentioned in this communication may not be suitable for all recipients, by continuing to read this website and its content you agree to the terms of this disclaimer.