Vodafone shares rise on Cevian news, hopes for more offers

The mark hangs outside a Vodafone store in Oxford, Britain May 16, 2017. REUTERS/Toby Melville

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LONDON, Jan 31 (Reuters) – Shares in Vodafone (VOD.L) rose 4% on Monday after reports that activist investor Cevian Capital bought an undisclosed stake in the mobile group to encourage it to lead a consolidation campaign in Europe.

Analysts and investors hailed the move after shares of the British company languished through the two years of the pandemic, held back by competition in markets including Italy, Spain and Portugal.

Chief executive Nick Read, a former chief financial officer of Vodafone who has held the top job since October 2018, called for more consolidation in Europe and said he was open to seeking merger opportunities for its spin-out. Vantage Towers infrastructure.

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He has already completed 19 deals, helping him focus on Europe and Africa.

The call for consolidation reflects a growing belief in the industry that Brussels could be more open to national agreements to reduce the number of operators in each market, allowing them to earn higher returns and invest more in their networks.

The need to invest in networks, highlighted during the pandemic, follows many years of regulators in Europe prioritizing consumer needs, requiring four or five operators in each market to compete and maintain low prices.

The biggest European telecom players are Vodafone, Deutsche Telekom (DTEGn.DE), France’s Orange and Telefonica (TEF.MC). Vodafone publishes its quarterly results on Wednesday.

The Financial Times said Cevian, Europe’s biggest activist fund, wanted Vodafone to be more aggressive in consolidating markets such as Spain, Italy and the UK.

Reuters reported earlier this month that Vodafone and Iliad were in talks to combine their businesses in Italy. Read more

Bloomberg first reported the development of Cevian. Vodafone and Cevian declined to comment.

Victoria Scholar, chief investment officer at Interactive Investor, said Vodafone had been embroiled in a price battle.

“Unless drastic action is taken to overhaul Vodafone, the stock should continue to underperform the FTSE 100, at a time when the UK market looks increasingly attractive from a valuation perspective, after having underperformed other global indices since Brexit,” she said.

Cevian’s arrival comes as activist investors play a growing role in Britain, with reports that Nelson Peltz’s Trian Partners has taken a stake in Unilever (ULVR.L) and news that Patrick Drahi now owns 18 % of BT (BT.L) .

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Reporting by Kate Holton, editing by Louise Heavens

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