By Andy Fry
Telco Vodafone’s share price has risen rapidly today following the surprise news that Liberty
Global has taken a 4.92 per cent stake in the firm. The move follows a tough six months for
Vodafone during which its share price has slumped by more than 20 per cent and it has lost its
CEO Nick Read. At time of writing, Vodafone was 4 per cent up in trading.
The new Liberty Global stake makes the US-listed firm one of the largest shareholders in the
company. However Liberty Global CEO Mike Fries says it is not a precursor for a full takeover
bid. He said that Vodafone’s shares are undervalued and described his company’s £1.2
billion(US$1.5billion) outlay on shares as an “opportunistic and financial investment. We
believe that Vodafone’s current share price does not reflect the long-term value of their
operating businesses, or their consolidation and infrastructure opportunities.”
Investors have long been frustrated by Vodafone’s performance on the stock market, with
former chief Read paying the price for lack of progress on this front. Critics of the firm point to
its large debt pile and the fact that it has been slow to unlock value and achieve efficiencies.
Key problems in recent years have included its loss-making Indian business and a lacklustre
performance in the German market.
Liberty Global and Vodafone know each other well. In the Netherlands they jointly control
Vodafone Ziggo. However in other markets they are rivals – for example in the UK where
Liberty Global owns half of Virgin Media O2, a Vodafone competitor.
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