Etisalat – recently renamed ‘e&’ – is extending its influence in the African telecoms market. The state-controlled Emirati group has just acquired a 9.8% stake in the British group Vodafone, headed by Nick Read. The transaction, valued at $4.4bn, makes Etisalat the main shareholder of one of the leaders in European and – indirectly – pan-African telecoms. Vodafone controls 60.5% of Vodacom, its pan-African subsidiary that operates in nine markets across the continent.
Avoiding regulatory constraints
In a statement released to the press, e& ruled out a gradual increase in the British company’s capital, saying it wanted to remain “a long-term shareholder in Vodafone and not seek to control or influence either the board or management team”.
In this context, the choice to acquire less than 10% of Vodafone is not insignificant, according to someone familiar with the various international regulations. “From a purely regulatory point of view, the clauses written into the operators’ specifications often stipulate that any change in the shareholding of the licensee or the entity that holds it, impacting more than 10% of the capital, must be notified to the regulator or submitted for its approval.
Acquiring 9.8% is therefore surely a limit that allows e& to avoid regulatory and stock market constraints,” he says. This will avoid administrative delays, particularly in Egypt, where both e& and Vodafone are market players.
This deal is like a breath of fresh air to the European group, which controls 21 subsidiaries in the world and is going through a difficult period. Vodafone is under pressure from financial markets, which are up in arms about its intense investment policy in 4G, 5G and fibre, while margins are melting in its western markets. The group has seen its value halved in five years despite recent satisfactory results, with revenues of nearly €45bn ($47bn), including $6.4bn contributed by Vodacom.
As for e&, this transaction allows it to impose itself a little more in Africa. The Emirati group already owns IAM (Maroc Telecom), which it acquired in 2013 and which is effectively present in 12 countries, under the name Moov Africa for its sub-Saharan subsidiaries and Maroc Telecom, the parent company of these African assets. This continental branch recorded a turnover of nearly 36bn MAD ($3.6bn).
It is worth noting that Etisalat has changed both its name and strategy, as e& is now presented as an investment conglomerate focused on mergers and acquisitions in the new technologies sector. To make this tech shift a reality, the Emirati group has recently increased its partnerships with international giants, such as Meta (ex-Facebook), Microsoft and Nokia.
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