French telecoms investor acquires e&’s entire stake as Vodafone shares climb and the group enters the next stage of its European restructuring

French billionaire Xavier Niel is poised to become Vodafone’s largest shareholder after agreeing to acquire a 16.2 per cent stake in the British telecoms group for approximately £4.4 billion.

Vega, an acquisition vehicle owned by the Niel family group, has entered into a binding agreement to purchase the entire Vodafone holding of Emirates Telecommunications Group, known as e&.

The transaction covers 3.94 billion shares, representing 16.21 per cent of Vodafone’s issued share capital and 17.13 per cent of its voting rights.

Vega will become the company’s largest shareholder once the transaction has secured the necessary regulatory approvals. Completion is expected by the end of the year, with the investment vehicle preparing to open discussions with the UK Government.

The announcement prompted a sharp market reaction, with Vodafone shares rising by as much as 12 per cent in early London trading. Shares in e& also moved higher following confirmation of the sale.

The agreed price of around 110.5p per share represents a premium of approximately 13 per cent to Vodafone’s closing price before the announcement. Including the company’s forthcoming final dividend, e& will receive total consideration of approximately 112.5p per share.

Niel said: “Vodafone is a compelling investment opportunity, underpinned by quality assets, strong brands, leadership positions and a diversified geographic footprint.”

Vega said the holding was intended to be a long-term strategic investment and confirmed that it did not currently plan to make an offer for Vodafone’s entire share capital.

The announcement nevertheless gives one of Europe’s most prominent telecoms investors a significant position in a company that has spent several years simplifying its international operations.

Vodafone welcomed Niel’s arrival, saying: “We know the Niel family group well and look forward to engaging with them as a supportive, long-term shareholder.”

The deal brings Niel back into Vodafone’s shareholder base after he acquired a smaller 2.5 per cent stake through a separate investment vehicle in 2022. That holding was later sold.

He has also made two unsuccessful approaches for Vodafone’s Italian business. The operation was subsequently sold to Swisscom as part of Vodafone’s wider programme of disposals.

Niel founded the French telecoms group Iliad and has assembled a portfolio of communications businesses and investments that includes Salt, Monaco Telecom, Eir, Tele2 and Millicom.

The Niel family group’s telecoms interests span 26 countries across Europe and Latin America, serving 139 million subscribers and generating annual revenues of approximately €24 billion.

Niel’s investment in Vodafone comes during a significant reshaping of the group under chief executive Margherita Della Valle, who took permanent control of the company in 2023.

Vodafone has exited Spain and Italy, sharpened its focus on Germany, Britain and Africa and completed the merger of its UK operation with Three.

The combined VodafoneThree business became Britain’s largest mobile operator by customer numbers and has committed to investing heavily in its 5G network.

The wider European telecoms sector has faced sustained pressure to consolidate as operators attempt to finance costly network upgrades while competing in markets divided among numerous national providers.

Niel has been among the industry figures arguing that greater consolidation could help European companies improve investment levels and compete more effectively with larger international technology groups.

His acquisition is therefore likely to intensify scrutiny of Vodafone’s longer-term direction, despite Vega’s declaration that it has no present intention of making a full takeover offer.

For e&, the sale marks a reversal after four years of gradually increasing its position in Vodafone.

The Abu Dhabi-based company acquired an initial 9.8 per cent stake in 2022 and later expanded its holding, becoming Vodafone’s largest shareholder and securing representation on the company’s board.

Following the sale agreement, e& terminated its formal relationship agreement with Vodafone and its board representative stepped down as a non-executive director.

The company said the decision would allow it to “sharpen its strategic focus on core businesses while unlocking the value created through this investment”.

The disposal is expected to generate approximately US$5.95 billion in cash proceeds for e&, including Vodafone’s final dividend, and a net cash return of around US$1.3 billion.

The transaction will initially be conducted through off-market trades involving three financial institutions, which will hold the shares until Vega has completed the relevant regulatory process.

Vega’s immediate influence will depend on the completion of the deal and the outcome of discussions with the UK authorities.

Its longer-term role may become clearer as Vodafone moves beyond the disposal and restructuring phase and seeks to produce stronger growth from its remaining European and African businesses.

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