Vodafone’s chief executive has confirmed he is in talks with rivals in its biggest markets to strike deals with “speed and resolve”, as the telecoms company seeks to respond to calls for a business shake-up from the new activist investor Cevian.
Nick Read, who has argued that the European telecoms industry must consolidate to create more profitable businesses that are more attractive to investors, confirmed the mobile operator was speaking to rivals in the UK, Germany, Italy and Spain.
The chief executive has struck 19 deals since being appointed chief executive three years ago, a tempo that he said he intended to keep up, in his first comments since Europe’s largest activist shareholder was revealed to have taken a stake in Vodafone.
“There has been media speculation about merger and acquisition activity in specific European markets,” said Read. “We feel the UK needs to consolidate to give [us] industrial scale so we can improve returns.
“We are active on a number of fronts and seeing good engagement from our counterparties, which confirms that we have a series of potential opportunities to shape the business with stronger assets in healthier markets and unlock value for our shareholders. We are approaching consolidation with speed and resolve.”
Vodafone has been linked with a string of potential deals including a takeover or merger with Three UK as well as counterparts in Germany, Spain and Italy.
“I look at markets where I see a strong case for consolidation without the need for punitive remedies, Those markets [are] Spain, Italy, the UK and now Portugal. Those four markets are the largest opportunity with a good and solid rationale,” he said. “We are engaged with multiple parties in multiple markets. We will remain open-minded and pragmatic to work through the opportunities at pace.”
Vodafone also controls 82% of Vantage Towers, its European mobile tower network floated last year, which Read confirmed was in talks with similar businesses owned by Germany’s Deutsche Telekom and France’s Orange.
“Bringing that combination together would make a European champion in towers. That would underpin infrastructure for the digital decade Europe wants to achieve,” he said.
Swedish-headquartered Cevian, known for taking longer-term positions to turn around businesses without taking aggressive action, is seeking a consolidation of the sprawling £34bn Vodafone empire to focus on its most profitable markets and inject more telecoms experience at board level.
“We do not comment on who is on our share register if it is not at a disclosable level,” he said. “But we have a regular dialogue with our large and small shareholders. I have looked at speculation [about what Cevian wants], to me everyone is confirming we are doing the right things.”
Vodafone’s shares rose almost 3% in early trading on Wednesday as investors warmed to the company’s mostly positive results, during which the company added 152,000 customers in the UK and reached almost 1 million fixed broadband customers, as its business benefited from Black Friday and strong iPhone sales.
The company will receive a revenue boost this year from the return of roaming charges for British travellers heading to Europe.
