Four years ago, the telecoms sector was deemed as dull as dishwater, with no sign of any excitement. Since then, we’ve had Vodafone spin off part of its assets as Vantage Towers, Euskaltel bought by Masmovil, BT form a joint venture for its sports arm and attract a strategic investor at the group level, and private equity firm KKR try to buy Telecom Italia.
Russ Mould, investment director at AJ Bell, said: “Now Abu Dhabi telecoms group e& has taken a big slice of Vodafone. This comes hot on the heels of talk that activist investor Cevian Capital has also taken a big stake with a view to getting Vodafone to sell some operations, consolidate its position in key markets, return more cash to shareholders and bring more telecoms experience onto the board. Furthermore, there has been chatter that Vodafone was in talks to merge its UK operations with competitor Three UK.
“The infrastructure sector has become hot property in recent years as investors have realised its role in the provision of essential services and the long-term potential for strong cash generation. Valuations have also been cheap among telecom stocks, making it a logical place for various people to plant flags and try and either enforce change or build market scale.”