e& increases Vodafone stake amid scrutiny of board structure

United Arab Emirates investment group e& has increased its stake in Vodafone to 14.6 per cent and has discussed the composition of its non-executive board, as the British telecoms company battles to convince investors it is on a path to improving its stuttering performance.

The group, formerly known as Etisalat and rebranded e&, has been gradually increasing its stake in Vodafone since May last year, when it acquired 9.8 per cent for around $4.4bn. 

But a weak performance in key markets such as Germany, and the exit of Vodafone’s chief executive Nick Read at the end of last year, has precipitated a 25 per cent decline in the company’s share price since then.

e&’s discussions with management are the first indication that Vodafone’s largest shareholder may be unhappy with business decisions or has sought to encourage changes.

The British telecoms group has been under renewed pressure after US telecoms group Liberty Global built a 5 per cent stake in the company, saying there were “interesting catalysts” for value creation.

In September last year, French telecoms tycoon Xavier Niel also announced he had bought 2.5 per cent of the company through his investment company Atlas Investissement.

e& said in a regulatory filing late on Monday evening that it had decided on April 12 that it was in its best interest, and the best interest of Vodafone, “for e& and its representatives to be able to engage with [Vodafone] and its representatives on a variety of topics, including topics for which e& may be deemed to be seeking to influence the issuer”. 

It said that on the same date it had initiated preliminary discussion about the “non-executive composition” of Vodafone’s board of directors.

When the Abu Dhabi-listed telecoms provider first built a 10 per cent stake in Vodafone, it said it planned to be a long-term shareholder and was supportive of its board.

State-controlled e& is keen to transform itself into a technology company and to expand globally beyond the 16 countries across the Middle East and Africa where it has about 160mn subscribers.

Vodafone has sought to introduce more heft to its board since the start of 2022 when it came under fire from activist investor Cevian Capital for not having enough non-executive directors with telecoms experience.

It has since added Stephen Carter, chief executive of Informa who served as the first chief executive of Ofcom, and Delphine Ernotte Cunci, president of French national public television broadcaster France Télévisions.

Its other appointments over the past year have more of a background in technology and gold mining.

Former chief executive Read stepped down at the end of last year. He has been replaced on an interim basis by Margherita Della Valle, Vodafone’s chief financial officer.

Vodafone declined to comment. e& did not immediately respond to a request for comment.