Xavier Niel Buys £4.4 Billion Stake in Vodafone

The French telecoms billionaire Xavier Niel has become Vodafone’s largest shareholder after buying a 16% stake for £4.4bn. On Friday, the Emirati telecoms group e&, which first took a stake worth £3.3bn in Vodafone in 2022, announced the sale of its entire shareholding for 112.5p a share. The acquisition is being carried out through Vega, an acquisition vehicle wholly owned by the Niel family group, which has agreed to buy e&’s 3.9 billion shares at £1.104792 each. Niel, who founded the telecoms company Iliad, has bought the stake at a 15% premium to Vodafone’s share price on Thursday. Shares in Vodafone jumped 12% on Friday.

Xavier Niel outlines long-term strategy for Vodafone

Niel said that Vega, which has been set up solely to house his stake in Vodafone, intends to be a long-term minority shareholder in the telecoms company. Niel, who had previously sold the 2.5% stake he took in Vodafone through his investment vehicle Atlas Investissement in 2022, said Vodafone is now a “compelling investment opportunity.” He stated, “As a simpler, more focused business, Vodafone is ready for a new phase of growth and is well placed to unlock substantial untapped value across its European and African operations. We are confident Vodafone can deliver sustainable growth and strong cashflow generation over the long term and – as an anchor investor based in Europe – we are ready to contribute our deep sector expertise and operational knowhow to its future success.”

Hatem Dowidar steps down as Vodafone board relationship ends

Vodafone has announced that Emirates Telecommunications Group Company, trading as e&, has agreed to sell its entire shareholding to Vega. The transaction brings the strategic relationship between Vodafone and e& to an end. Following completion of the agreement, the relationship agreement established between Vodafone and e& in May 2023 has been terminated. Hatem Dowidar, who served on Vodafone’s board as e&’s nominated director, has also stepped down with immediate effect. E& had one seat on Vodafone’s board, with the right to nominate a second if its shareholding ever exceeded 20%, but at this point Niel does not have representation. A spokesperson for Niel said that the transaction on Friday was only a share purchase, and there was no governance package attached to the deal. “As a significant long-term shareholder, assuming regulatory approvals are obtained, we would expect an appropriate level of engagement with the company over time,” the spokesperson said.

Kester Mann evaluates the exit of e& and Iliad’s market position

Kester Mann, director, consumer and connectivity at CCS Insight, said the move marks a surprisingly sudden exit for e&. He noted that the announcement indicates the Middle East operator is stepping back from its strategy to become a global telecom and technology player, and now wishes to concentrate on its core businesses. Mann also observed that Niel’s ownership of Iliad—which has more than 40 million customers across France, Italy, Poland and Ireland—means a full takeover of Vodafone is not on the cards. Vega has confirmed under Rule 2.8 of the Takeover Code that it does not intend to make an offer for the whole of Vodafone, though it reserved the right to set that restriction aside in certain circumstances, such as with the agreement of the Vodafone board or if a third party announces a firm offer.

Xavier Niel: The Unconventional Billionaire

Carl Murdock-Smith, a telecoms analyst at Citi, said Niel has a record of being an active shareholder and could push for changes including job cuts. Months after taking a 19.8% stake for $1.3bn in Tele2 in 2024, which made him the Swedish telecoms company’s biggest shareholder, it announced it was cutting 15% of the workforce. “We believe investors will look to what happened at Tele2 after a Niel investment vehicle became the largest shareholder – such as a 15% workforce reduction plan – as a potential framework of what to expect,” Murdock-Smith said in a note to clients. “Investors will be interested to see what level of board representation is requested by Mr Niel.”

Kester Mann evaluates the exit of e& and Iliad’s market position — Photo: Yahoo Finance UK

In recent years, Vodafone has restructured its business – including selling its Italian and Spanish operations and its 50% stake in its Dutch joint venture – as well as merging with Three to create the UK’s largest mobile operator. In May, Vodafone said it would acquire CK Hutchison’s 49% stake in their VodafoneThree joint venture to take full control of the company. Vodafone’s investment case continues to be supported by resilient cash generation and management’s expectations of delivering results at the upper end of fiscal 2026 guidance, alongside anticipated growth in fiscal 2027. However, the outlook remains tempered by continued earnings volatility, net losses and a relatively high debt burden. The company serves more than 370 million mobile and broadband customers while supporting over 240 million IoT connections globally.

Physical settlement is expected by the end of the year once regulatory approvals are obtained. Niel, who is estimated to be worth $15.5bn (£11.5bn) by Forbes, has built telecoms businesses in France, Italy, Poland and Iceland. His partner of more than 15 years is Delphine Arnault, the daughter of France’s richest man, Bernard Arnault, and an heiress to the luxury conglomerate LVMH.

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