By Paul Sandle
LONDON – Vodafone is pursuing mergers with rivals in multiple European markets, spurred on by more favourable signals from regulators who have realised the value of network investment during the pandemic, Chief Executive Nick Read said.
“We are approaching consolidation with speed and resolve,” he told reporters after Vodafone reported third-quarter numbers.
“We are active on a number of fronts and we are seeing good engagement from our counterparties which confirms that we have a series of potential opportunities to shape the business with stronger assets in healthier markets.”
The telecoms group, which has been targeted by activist investor Cevian Capital, sees opportunities in Spain, Italy, Britain and Portugal, Read said.
Other parties would have to be pragmatic and realistic on valuation, he said, if deals were to happen. “We will be realistic on the valuation of our business.”
Reuters reported earlier this month that Vodafone and Iliad were discussing a tie-up in Italy.
A report in Spain on Wednesday said it was talking to MasMovil there, and other reports have previously linked the British company with Hutchison’s Three in its home market.
Read said an industrial merger with a like-minded operator such as Orange or Deutsche Telekom would be the “ideal option” for the Vantage Towers business he spun out last year.
If that didn’t materialise, there were other options such as a combinations with a tower company, he said.
Read declined to confirm that Cevian was on the register, but he said he had been talking about consolidation “for years”.
“The important moment was COVID, which we’ve been dealing with for over two years, in terms of setting a different dialogue with policy makers,” he said.
Vodafone reported a 2.7% rise in third-quarter group service revenue, described by Read as “solid”.
But there was no respite from intense competition in Spain, where it lost 53,000 mobile contract and 50,000 broadband customers, and in Italy, which recorded an eighth consecutive quarter of decline.
Shares in Vodafone, which are trading at the same level as 12 months ago, were 3.4% higher by 1043 GMT.
Read said Vodafone was “firmly on track” to meet its full-year expectations of 15.2 billion to 15.4 billion euros in adjusted core earnings and at least 5.3 billion euros of free cash flow.