Market Loop - UAE telecom giant buys 10% of Vodafone

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16th May 2022

Bite-sized business news from the UK and beyond

Good morning Congratulations to the UK’s Sam Ryder who finished second at the Eurovision Song Contest behind Ukraine on Saturday. This was the UK’s best result since 1998 and comes after two consecutive years of the dreaded ‘nul points’.

Today's stories

Dialling in – UAE telecom giant buys 10% of Vodafone
Social standstill – Elon Musk pauses Twitter takeover

TELECOM
UAE telecom giant buys 10% of Vodafone

What happened?
Over the weekend Etisalat, the telecoms giant owned by the UAE government, announced it had bought a 9.8% stake in Vodafone for £3.6bn.

What’s behind the move?
Founded in 1976, Etisalat provides mobile services in 16 countries across the Middle East, Africa and Asia. In recent years it’s been looking to expand into Europe and an investment in Vodafone fits the bill. Vodafone is Britain’s third biggest mobile provider. In total it has 300m customers spread across more than 20 countries including Germany, Italy and Spain. The company is also a major player in Africa and has a joint venture in India.

Could a 100% takeover be on the cards?
Etisalat has played down a full-blown takeover saying instead that it was looking to build a “mutually beneficial strategic partnership” and was supportive of Vodafone’s management.

But the move puts more pressure on Vodafone to increase the scale of the business i.e. buy up other telecoms firms, in order to improve shareholder returns.

Vodafone is not the only UK telecoms company getting interest from overseas
A year ago Altice, France’s second largest telecoms operator, bought a 12% stake in BT for £2bn, becoming BT’s largest shareholder. Since then, it’s steadily built up the position to 18%.

Analysts say that Etisalat could look to emulate Altice by slowing building up its ownership in Vodafone.

Other stories to keep you in the loop

Government pushes back against ethnicity pay gap reporting
Premier League weighs ban on debt-fuelled club takeovers
Ban on buy-one-get-one-free junk food deals delayed for a year
Saudi Aramco: Oil giant sees profits jump as prices surge
Food shortages could force 'a third' of fish and chips shops to close
Goldman Sachs says bosses can take unlimited time off
EasyJet offers £1,000 bonus as airlines battle to recruit staff

TECH
Elon Musk pauses Twitter takeover

What happened?
On Friday Elon Musk announced that his deal to buy Twitter was “temporarily on hold” sending shares in the social media platform down by as much as 25% on the day.

Why the hold up?
Less than a month ago Twitter’s board of directors agreed to Elon Musk’s offer to buy the company for $44bn to take it private.

But now the CEO of Tesla and SpaceX says he wants more details on the platform's disclosure that spam and fake accounts comprise less than 5% of its 229m daily users. He later tweeted he is still committed to the acquisition.

Could he really walk away from the deal?
Musk's announcement comes two weeks after Twitter disclosed its user figures as part of its quarterly financial results. Twitter itself had cast doubt on the total figure of spam and fake accounts, saying the figure is likely to be higher. Musk has been vocal about wanting to clean up spam bots on Twitter that mimic real people. If he were to cancel the deal—depending on the details—he may potentially owe Twitter a $1bn breakup fee.

Whatever happens talk of the deal has already sent shockwaves through the company
On Thursday, Twitter CEO Parag Agrawal announced several big shakeups within the company in an email to staff, including firing two top executives. The company is also pausing most hiring and pulling back on spending in most areas, though it’s not currently planning any layoffs.

Stat of the day

The world’s richest 500 people have lost more than $1 trillion in net worth this year

Interesting links from around the web

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Market Loop - UAE telecom giant buys 10% of Vodafone

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