Liberty World, the US group chaired by “cable cowboy” John Malone, has purchased a virtually 5 per cent stake in Vodafone, because it bets that forthcoming offers and restructuring will revive the beleaguered UK telecoms group.
Denver-based Liberty World has acquired 1.3bn shares, representing 4.92 per cent of share capital, financed principally by means of derivatives, and requiring solely £225mn in fairness funding from the group. The corporate mentioned it could not search a board seat and confirmed that it was not contemplating a suggestion for Vodafone.
“The inventory’s low cost — it’s an opportunistic and monetary funding,” Liberty World’s chief government Mike Fries advised the Monetary Instances, including that his firm had $3.5bn in money to “put to work”.
Fries mentioned Vodafone had some “fascinating catalysts” for potential worth creation, together with a proposed merger with CK Hutchison’s British enterprise Three UK, for which talks are nonetheless ongoing.
“We solely [operate in] one market with 4 cellular gamers — everybody else has consolidated to a few — Eire, Belgium, Holland, Switzerland. The UK is an anomaly,” he mentioned. “We’re affected person. We don’t know that anyone or two issues will occur in a single day however we perceive the publicly disclosed technique and we predict it’s a very good one.”
Liberty World will be part of a star-studded roster of telecoms names which have constructed stakes within the struggling European firm which has misplaced greater than 55 per cent of its worth over the previous 5 years.
In September, French billionaire Xavier Niel introduced that he had purchased a 2.5 per cent stake in Vodafone through his funding car Atlas Investissement. He desires Vodafone to streamline its enterprise, drive down debt and enhance money technology. In the meantime, United Arab Emirates telecoms operator e& has constructed a stake totalling 13 per cent.
Liberty World has been one of the energetic dealmakers in European telecoms over the previous 5 years, having offered, purchased and merged numerous operators. In 2021, it closed a £31bn settlement to merge its Virgin Media enterprise with Telefónica’s O2 and in addition offered its German and a few jap European property for €18.5bn in 2018.
Vodafone has had a very difficult 12 months after the FTSE 100 group got here below strain from a variety of buyers to simplify its sprawling enterprise, shed poorly performing items and decentralise its international operations.
Europe’s greatest activist investor Cevian Capital purchased a stake whose measurement was undisclosed and angled for a shake-up however offered out fully after deciding change was unlikely to occur shortly.
Former chief government Nick Learn, below whose tenure Vodafone misplaced greater than 40 per cent of its worth, stepped down on the finish of final 12 months. He has been changed on an interim foundation by Margherita Della Valle, Vodafone’s chief monetary officer.
Fries mentioned he believed Vodafone had suffered from the identical structural difficulties as different telecoms teams throughout Europe, together with overly fragmented markets and regulators’ resistance to permit consolidation, however argued that it appeared that the atmosphere was altering.
“Regulators have realised that investments ought to include affordable alternatives to make a return, they’ve began to assist the business greater than prior to now,” he mentioned.
Liberty World has not held discussions with both e& or Niel in regards to the stake-building, Fries mentioned.