UAE telecoms company e& acquires 9.8% in UK's Vodafone Group for $4.4bn

UAE’s biggest telecoms operator plans to be a global telecom and technology player and increase its exposure to international markets

e&, formerly known as Etisalat, does not seek board representation on Vodafone and does not intend to make an offer for the company, it told ADX. Reuters

The UAE’s biggest telecoms operator e& acquired a 9.8 per cent stake in British mobile carrier Vodafone Group for $4.4 billion as it seeks to diversify operations globally.

Emirates Telecommunication Group, formerly known as Etisalat, has acquired approximately 2,766 million shares in Vodafone, it said in a statement on Saturday to the Abu Dhabi Securities Exchange (ADX), where its shares are traded.

“Vodafone is one of the leading businesses at the heart of digital communications in Europe and Africa with a compelling business offering critical connectivity and digital services,” Hatem Dowidar, group chief executive of e&, said.

“Our investment represents a unique opportunity to acquire a significant stake in one of the leading and strongest global telecom brands, and a company that we know well. We are looking forward to building a mutually beneficial strategic partnership with Vodafone with the goal of driving value creation for both our businesses, exploring opportunities in the rapidly developing global telecom market and supporting the adoption of next-generation technologies.”

The company, based in Abu Dhabi, was founded in 1976 and is the UAE's oldest telecoms business. It has operations in nearly 16 countries across the Middle East, Asia and Africa, serving more than 156 million customers.

In February this year, e& rebranded as it sought to transform into a global technology investment conglomerate.

The UAE telecom operator does not seek board representation on Vodafone and does not intend to make an offer for the company, the statement said.

“e& sees this investment as a highly efficient use of its strong balance sheet at a compelling and attractive valuation with strong currency diversification benefits. It provides a clear opportunity to realise future value through potential capital gains and dividends. It may also lead to possible commercial partnerships in the areas of R&D, technological applications and procurement,” according to the statement.

Vodafone’s reputation for being a digital-first operator, underpinned with its rigorous approach to corporate governance and well-regulated global footprint, makes it an attractive opportunity for e& at this current time, the statement said.

e& reported a 3.6 per cent rise in first-quarter net profit supported by growth in the number of subscribers.

Net profit attributable to the owners of the company for the three-month period ended March 31 rose to Dh2.4bn ($653.3 million), compared with Dh2.3bn during the same period last year.

Revenue of the operator remained flat at more than Dh13.3bn during the period. Earnings a share rose to 0.28 cents.

In October, it signed a binding agreement with Abu Dhabi-based artificial intelligence services provider G42 to merge its data centre services and create the UAE’s largest data centre provider.

In August last year, Etisalat acquired an additional stake in Maroc Telecom Group, increasing its effective ownership from 48.4 per cent to 53 per cent.