Vodafone has announced plans to deepen its ties with United Arab Emirates telecoms group e&, which has amassed an almost 15 per cent stake in the UK operator and will now have a seat on its board.
Under a plan set out on Thursday, Hatem Dowidar, chief executive of e&, will join Vodafone’s board as the two companies said they would work together in areas including procurement and offering services to multinationals.
Dowidar will have a board seat as long as Abu Dhabi-listed e& retains its 14.6 per cent stake. If its holding climbs above 20 per cent, the group will be able to nominate a second non-executive director.
State-controlled e&’s stakebuilding began in May 2022 and comes as Vodafone faces increasing pressure to improve a performance blighted by its struggles in the German market. Vodafone’s challenges in Germany contributed to the exit of Nick Read as chief executive last year.
The UAE group, formerly known as Etisalat and rebranded e&, told investors last week that it was considering increasing its stake in Vodafone to 20 or 25 per cent to secure “enough influence” over the group, according to Carl Murdock-Smith, an analyst at Berenberg, who attended the call.
e& has previously said its stake would not go above 24.99 per cent or that it would dispose of a significant portion of Vodafone’s stock.
e& is attempting to transform itself from a legacy telecommunications company into a technology group, expanding its footprint beyond the 16 countries in the Middle East and Africa where it operates.
Analysts have speculated that e& could be interested in some of Vodafone’s African assets.
The UAE’s sovereign funds and state-linked companies, benefiting from a sustained period of high oil prices, are expanding as Gulf states try to accelerate the diversification of their economies.
As part of the closer links between them, the two groups will look to jointly offer digital services to multinational customers and public sector organisations. They said on Thursday that they would also share best practices in procurement.
Margherita Della Valle, who was named as Read’s permanent replacement last month, said: “We know e& well and I’m delighted we have strengthened our existing relationship through this strategic partnership.”
Vodafone announced late on Wednesday that three of its longstanding non-executive directors — Valerie Gooding, Sir Crispin Davis and Dame Clara Furse — will not seek re-election at the group’s annual meeting this year, freeing up space for a new cohort of board members.
Vodafone has been under pressure over the past 12 months to bolster the ranks of its non-executive directors with experience of the telecoms industry after coming under fire from activist investor Cevian Capital.
It has since added Stephen Carter, chief executive of Informa who served as the first CEO of UK telecoms regulator Ofcom, and Delphine Ernotte Cunci, president of French national public television broadcaster France Télévisions.
e& is not the only telecoms group to take a stake in Vodafone. US telecoms group Liberty Global built a 5 per cent stake in February, saying there were “interesting catalysts” for value creation.
French telecoms tycoon Xavier Niel announced last September that he had bought 2.5 per cent of the company through his investment company Atlas Investissement.