(Adds background, context)
LONDON, Feb 1 (Reuters) - One of the biggest shareholders in
Vodafone said it backed management efforts to pursue
deals to build greater value after activist investor Cevian
Capital built an undisclosed stake in the British company.
Andrew Millington, head of UK equities at Abrdn Plc
, said Vodafone management had been explicit in recent
months that they intended to explore ways to create value
through in-market consolidation with its operating assets and
towers infrastructure.
"While I've no insight into Cevian's plans I think this
approach has widespread support from shareholders," Millington
said in a statement. Abrdn is a top-10 Vodafone shareholder.
The British mobile operator has declined to comment.
The arrival of Cevian on the shareholder register follows a
lacklustre few years at Vodafone when the shares have languished
during the pandemic.
Over the last five years, Vodafone has delivered a total
return including dividends of negative 4.7%, compared with a 28%
return for the benchmark FTSE 100 Index, according to
Breakingviews. Over the same period, Vodafone's
Johannesburg-listed African subsidiary, Vodacom, has managed
7.2% in hard-currency terms.
Vodafone, like its rivals, has in recent years had to invest
heavily to build first 4G and then 5G mobile networks and
fibre-optic broadband at a time when European regulators have
prioritised the needs of consumers by keeping mobile bills low.
The bet of Cevian and other supportive investors is that
Brussels will ease that position, by allowing mergers to reduce
the number of operators in each market, leading to a drop in
competition and a rise in prices, and greater investment in
networks.
Vodafone Chief Executive Nick Read, previously the CFO, last
year spun out the group's towers business, and the company has
said it is looking for industrial mergers.
Read has also called for consolidation to be allowed in some
of its key markets - Spain, Italy, Portugal and the UK. Reuters
reported earlier this month that Vodafone and Iliad were in
talks to combine their businesses in Italy.
Peter Schoenfeld, founder of New York-based hedge fund PSAM,
told the Financial Times that he welcomed the arrival of Cevian.
"It's long overdue that a shareholder holds the board
accountable for its past actions and inaction," he said.
(Reporting by Kate Holton in London and Jaiveer Singh Shekhawat
and Aby Jose Koilparambil in Bengaluru; Editing by Krishna
Chandra Eluri and Louise Heavens)
Vodafone (VOD)
