Vodafone’s new investor looks passive-aggressive

A cryptic new name isn’t the only puzzling thing about e&. The Gulf-based telecom giant formerly known as Etisalat has splurged $4.4 billion on a 9.8% stake in struggling Vodafone. For now Chief Executive Hatem Dowidar says he’s happy just to be a passive minority investor. The company doesn’t want board seats and has backed Vodafone boss Nick Read and his strategy.

But with activist shareholder Cevian Capital pushing for changes including a possible breakup of the UK-based operator, such passivity may not last.

With $600 million of net cash on its books, the $75 billion e& has money to spend. And Vodafone looks cheap. Including debt it’s valued at just 5 times expected EBITDA for next year, half the multiple investors attach to its new shareholder. Poor performance justifies the discount, though. Vodafone’s top line is growing at an anaemic 1% a year and its EBITDA margin is static at 33%. If Dowidar sees sense in Cevian’s thinking, it’s a short switch from passive to aggressive. Reuters