e& exits Vodafone as Niel takes control

Abu Dhabi-based technology group e& has agreed to sell its entire 16.21% holding in Vodafone Group to an investment vehicle controlled by French telecommunications entrepreneur Xavier Niel’s family for about AED21.8 billion.
The transaction covers 3,944,743,685 Vodafone ordinary shares, representing 17.13% of the company’s voting rights. Vega, the Niel family’s acquisition vehicle, will pay about 110.5 pence in cash for each share. E& will also receive Vodafone’s final dividend for the 2026 financial year, lifting the total value to approximately 112.5 pence per share.

The 2.02-pence dividend component is due to be paid on July 30. The agreed valuation represented a double-digit premium to Vodafone’s closing market price before the transaction was disclosed, prompting a sharp rise in shares of both Vodafone and e&.

The shares will initially be transferred through simultaneous off-market block trades to three financial institutions. Those institutions will hold the stock until Vega completes the regulatory approvals required for the purchase. Completion is expected before the end of 2026.

E& expects the sale to produce a net cash return of about AED4.7 billion, equivalent to nearly $1.3 billion. The group said the disposal followed a strategic review of its international investment portfolio and would release capital for its core telecommunications, digital services and technology businesses.

The agreement ends e&’s four-year investment in Vodafone. The group acquired an initial 9.8% stake in May 2022 for about $4.4 billion and gradually increased its holding, becoming Vodafone’s largest shareholder. Its investment was initially described as supportive and strategic rather than a step towards a takeover.

A formal relationship agreement signed in May 2023 gave e& representation on Vodafone’s board and established areas for commercial cooperation. These included enterprise services, procurement, roaming, technology development and access to digital infrastructure across Europe, the Middle East and Africa.

That agreement has now been terminated. E& chief executive Hatem Dowidar, who served as the group’s nominee non-executive director at Vodafone, resigned from the British company’s board with immediate effect following the sale announcement.

Vega will become Vodafone’s biggest shareholder once the transaction clears the necessary approvals. Niel, the founder and controlling shareholder of French telecoms group Iliad, has built an extensive portfolio of communications investments across Europe and Latin America.

His businesses have operations or substantial interests in France, Italy, Poland, Ireland, Sweden and several Latin American markets. Niel previously acquired a 2.5% holding in Vodafone through Atlas Investissement in 2022 before disposing of that position.

The purchase marks his return as a major investor at a point when Vodafone is emerging from a prolonged restructuring programme led by chief executive Margherita Della Valle. The company has sold its businesses in Spain and Italy, reduced its exposure to smaller markets and concentrated resources on Britain, Germany and Africa.

Vodafone has also combined its UK operations with Three, creating the country’s largest mobile network by customer numbers. The merger was approved subject to investment commitments intended to expand 5G coverage and strengthen competition in the British communications market.

Niel said Vodafone offered quality assets, established brands and leading positions across a broad geographic footprint. He described the group as a simpler and more focused business capable of delivering growth and unlocking value from its European and African operations.

Vega has said it does not intend to make an offer for the whole of Vodafone. The investment vehicle has not secured special governance rights or board representation as part of the transaction, although its position is expected to give the Niel family considerable influence over future strategic discussions.

The change in ownership could increase investor pressure on Vodafone to accelerate cost reductions, improve performance in Germany and strengthen cash generation. Germany remains the group’s largest market but has struggled with customer losses, network challenges and operational weaknesses.