EGYPT – Emirates Telecommunication Group Company PJSC (Etisalat) has acquired 9.8 percent stake in Vodafone International Group for US$4.4 billion.
The move came days after Emirates said it was looking to expand into new markets in Africa, Europe, and Asia, and into areas outside telecoms such as financial technology, as it seeks to drive growth, according to Reuters.
The deal will benefit Vodafone, which, like other mobile operators, has been struggling in its more mature markets, where competition and regulation have pushed prices lower.
Net debt at the group has reached US$46.1 billion and Chief Executive Nick Read is under pressure to simplify its portfolio and improve returns after a more than 20% slide in its share price since he took over in 2018.
Vodafone said it looked forward to building a long-term relationship with United Arab Emirates-based Etisalat.
“We continue to make good progress with our long-term strategic plans and will provide an update in our FY22 Results announcement on 17 May,” it said in a statement.
Etisalat was established in 1976 and the group launched the first mobile phone network in the Middle East in 1982.
In 1983, the ownership structure changed, with the UAE government acquiring 60 percent of the company’s shares, while the remaining 40 percent of the public shares were traded.
According to Reuters, the Emirati group has no intention of making an offer to buy Vodafone, saying that it fully supports the company’s board of directors, the current management team, and its current business strategy.
“We see this investment as a good opportunity for the company and its shareholders as it will allow us to enhance and develop our international portfolio in line with our strategic ambition,” said Hatem Dowidar, CEO of Etisalat.
The Emirati company recently divided its business into electronic services focusing on consumer and electronic services and projects to provide digital services to the government and companies.
In the first quarter of 2022, the net profit of the Emirates Group grew by 3.6 percent year on year, recording 2.4 billion dirhams (US$653.5 million).