US investor Malone’s interest in the mobile phone provider, which has been struggling for months, gave Vodafone shares an unexpected tailwind.
(Photo: dpa)
London John Malone is called the “Cable Cowboy” in the telecommunications industry because of his often unconventional business practices. The US group Liberty Global, led by Malone, has now acquired a stake of almost five percent in the British mobile communications provider Vodafone. Liberty paid around 1.2 billion pounds (almost 1.4 billion euros) for a good 1.3 million shares, but initially ruled out a takeover bid for the British competitor.
Malone’s interest in the mobile phone provider, which has been struggling for months, gave the Vodafone share an unexpected tailwind: the price rose by more than two percent on Tuesday morning. In the past 12 months, the British company’s market value has fallen by almost a third.
Liberty CEO Mike Fries said, “We believe (…) that Vodafone’s current share price does not reflect the underlying long-term value of its operations or the announced consolidation and infrastructure opportunities.” Malone is the chairman and controlling shareholder of the US -Group.
Liberty is one of several investors who have invested in Vodafone over the past year. They include French billionaire Xavier Niel and UAE-backed Emirates Telecommunications Group (Etisalat), which has increased its stake to 13 percent.
Vodafone and Liberty have been closely intertwined for years. They share a joint venture in the Netherlands called Vodafone Ziggo. In 2019, Liberty sold its German and Eastern European business to Vodafone for €18.4 billion. In the UK, the British group competes with the cable and mobile business of Virgin Media O2, which is 50% owned by Liberty.
There is a broader consensus among investors about the hidden value that could be unlocked at Vodafone, said Robert Grindle, a telecoms analyst at Deutsche Bank in London. He compared the maneuvers of the 81-year-old Malone with the attacks of an alligator. “You don’t see him coming, and then he just shows up,” Grindle said.
Problems in Germany haunt the British mobile operator
Vodafone has enormous problems, especially in important European foreign markets. A loss of customers and the resulting decline in revenue meant that CEO Nick Read had to resign last year. Since then, the Italian and former CFO Margherita Della Valle has been running the group on an interim basis. She had recently reaffirmed the company’s profit targets, but admitted that Vodafone was falling short of its potential, especially in Germany. In January, the British announced they would cut 500 jobs.
Malone’s entry could not only shake up the German market. “The deal with Vodafone could also raise some interesting questions about Liberty UK’s position,” said Kester Mann, market researcher at CCS Insight, referring to the Americans’ stake in Vodafone’s competitor Virgin Media O2. The step can also be seen as a positive indicator for a possible merger of Vodafone with the mobile phone provider Three, which belongs to the Hutchison group.
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