The US telecoms group chaired by “cable cowboy” John Malone has snapped up a stake in Vodafone in a bet on the UK company’s revival – but has ruled out making a takeover bid.
Liberty Global, which is an investor in ITV and Virgin Media O2, told investors on Monday it had acquired a 4.92% stake in Vodafone, saying it believed the shares were undervalued.
Liberty Global chief executive Mike Fries said: “We believe, like many others, that Vodafone’s current share price does not reflect the underlying long-term value of their operating businesses, or their announced consolidation and infrastructure opportunities.”
Vodafone’s stock, which climbed higher than £5 shortly before the dotcom crash in 2000, has fallen by more than 30% over the past 12 months to 94p, valuing the company at £25.7bn.
The stake sale comes after a tumultuous year for Vodafone in which Europe’s biggest activist investor, Cevian Capital, took a stake to push for a revamp of the group, before selling its holding.
French billionaire Xavier Niel then bought a 2.5% stake in Vodafone in September through his Atlas Investissement vehicle and hopes to persuade executives to streamline the business. Telecoms operator e&, which is based in the United Arab Emirates, owns 13%.
The chief executive, Nick Read, was ousted at the end of last year after presiding over a 40% drop in the company’s value during his tenure, and has been replaced by the chief financial officer, Margherita Della Valle, on an interim basis.
Late last year, Vodafone cut its annual profit forecast and announced a €1bn-plus (£879m) cost-cutting plan, including job losses, to cope with soaring energy bills and inflation.
Liberty said it did not intend to seek a board position and “is not considering an offer for Vodafone”.
The company said it would fund the deal through derivatives and would only require £225m through equity funding from the group. It ultimately intends to fund the purchase through sell-offs of “non-core” assets.
Malone is known as one of the most prolific dealmakers in the telecoms industry and has been nicknamed the “cable cowboy”. He was also labelled the “swamp alligator” among Wall Street traders for his cut-throat tactics.
Liberty is already a partner with Vodafone on its Ziggo joint venture in the Netherlands.
Vodafone UK is in discussions with its rival Three UK about combining to create Britain’s biggest mobile operator, which would put it toe-to-toe with rivals BT and Virgin Media O2.
Vodafone declined to comment on Liberty’s acquisition of shares.
