Vodafone Idea surges 6% on Emirates Telecom stake boost for Vodafone Plc

The share price of Vodafone Idea, India’s third-largest telecom company, gained 6 percent on April 26 after Emirates Telecommunications Group Co (e&) increased its stake in Vodafone Group Plc, the holding company of Vodafone Idea, from 14 percent to 14.6 percent.

As of December 2022, the promoters held around 75 percent in Vodafone Idea, with Vodafone Plc holding 48 percent and the Aditya Birla Group holding 27 percent.

According to e&, it has received regulatory approval to raise its stake in Vodafone Plc to 15 percent. The company has explored potential investment in Vodafone’s African business, Vodacom Group Ltd, media reports said. The Emirati company is also discussing revamping the board with the British telecom group.

“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,” according to Erhan Gurses, analyst, BI telecoms.

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Vodafone Plc’s shares have declined around 29 percent in the last year. The telecom company ousted Chief Executive Officer Nick Read in December 2022, and the board has not yet named a replacement.

Vodafone Idea, also saw a surge of 10 percent last week when it announced Kumar Mangalam Birla is returning to the board as an additional director.

In February 2023, the Centre announced that it would pick up around a 33 percent stake in Vodafone Idea in lieu of interest payouts over delayed spectrum and adjusted gross revenue payments. This move will make the government Vodafone Idea’s largest shareholder and reduce promoter shareholding to around 50 percent.

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The debt-ridden telco has lost around 33 percent of its market capitalization in the last year, declining 22 percent in the last six months.

At 12.23 pm, the scrip was trading 4.76 percent up at Rs 6.6 with the benchmark Nifty up 0.13 percent at 17,792.75 points.

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