Vodafone’s top backer e& discusses board changes and ups stake

Vodafone Group Plc’s biggest shareholder, Emirates Telecommunications Group Co., has opened talks with the troubled British telecom group to push for changes on its board.

The investor, also known as e&, began discussions with Vodafone on April 12 about the non-executive directors in order to engage “on a variety of topics,” it said in a regulatory filing late Monday. The Abu Dhabi-based company, which is majority owned by the United Arab Emirates’s sovereign wealth fund, now owns 14.6% of Vodafone, up from 14%.

Vodafone’s shares, which have been steadily declining for years, have dropped about 25% since e& announced its initial holding in May. The telecom company in December ousted Chief Executive Officer Nick Read — who struggled to appease investors with moves to streamline the business and sell assets — and the board hasn’t yet named a replacement to lead Vodafone’s turnaround.

Vodafone rose 2% to 91.51 pence at 10:30 a.m. in London trading on Tuesday.

Two of Vodafone’s non-executive directors — Clara Furse and Crispin Davis — may step down as soon as this year because they’ve served the maximum, nine-year term recommended under the UK’s corporate governance code.

A representative for Vodafone declined to comment. A spokesperson for e& didn’t immediately respond to a request for comment. Furse and Davis couldn’t immediately be reached for comment. Vodafone usually holds its shareholder meetings, where board directors are elected, in July.

What Bloomberg Intelligence Says:

The pursuit of board representation by Vodafone’s largest shareholder e&, while expected given its growing 14.6% stake, is a positive move in light of e&’s plan to be a long-term investor in the carrier, making further stakebuilding likely. The Emirati company’s push is a change from its original position, suggesting it may become a pro-active force to ensure execution aligns with its long-term strategy. Erhan Gurses, BI telecoms analyst

E& is one of three strategic holders who now control more than a fifth of the Newbury, England group, including Liberty Global Plc, which holds almost 5%, and French billionaire Xavier Niel, who said he bought a 2.5% stake in September.

E&, which has said it has regulatory approval to raise its stake in Vodafone to 15%, has explored a potential investment in Vodafone’s African business, Vodacom Group Ltd., people familiar with the matter have said. Bloomberg