Seven months ago, Vodafone rejected a €11.25bn offer for its Italian business from a consortium backed by French billionaire Xavier Niel. That should have been the end of the story. Niel’s telecoms business Iliad said it would pursue a standalone strategy in Italy.
But Niel was saying au revoir, not adieu, to the UK-listed European mobile phone group. On Wednesday, his investment vehicle Atlas revealed it had a 2.5 per cent interest in Vodafone. The tycoon may have found a way to take a second shot at Vodafone’s Italian assets.
Niel is the second French tycoon parking tanks on the lawn of a British telecoms champion. Patrick Drahi has an 18 per cent stake in BT Group. Aficionados of Fantasy M&A think Drahi is interested in BT’s Openreach network business.
Atlas stressed it is independent of Iliad and Niel. It described Vodafone as “an attractive investment opportunity”. But intriguingly it sees “opportunities to accelerate . . . the streamlining of Vodafone’s footprint.”
Niel may have an ally in Cevian Capital. The Swedish activist has an unspecified exposure to Vodafone and is pushing the board to overhaul the sprawling business. This could include the sale of the Italian and Spanish units.
Opposition may come from Emirates Telecommunications Group. The UAE state-controlled investment group has a near-10 per cent stake in Vodafone.
The telecoms group needs to dial up better returns for shareholders, however. The stock is down nearly 50 per cent over the past five years.
Vodafone has already reduced its footprint. It sold its Hungarian business for $1.8bn last month and hopes to sell a significant stake in the group’s masts business, Vantage Towers. It has held talks to merge its UK operations with Three UK.
Selling the Italian business would be a natural next step. Revenue growth is faltering at a business which made up 11 per cent of Vodafone’s turnover last year.
Niel has a better chance of breaking up Vodafone than Drahi does of splitting BT.
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