Vodafone has grown ‘too fat’ warns French activist investor

The French activist investor keeping Vodafone’s board on its toes said this weekend that the telecoms giant had become “too fat, too slow (and) too complex.”

Xavier Niel, who holds a significant chunk of the firm’s shares, told the Sunday Times the giant needed to sell infrastructure and “smaller non-core assets in order to regain financial flexibility.”

Vodafone’s embattled chief exec Nick Read announced last week he would step down at the end of the year, with the board and shareholders frustrated by a share price which has almost halved during his four-year tenure – compared to a FTSE-100 that has been broadly flat over the same period. 

The company has appointed an interim boss with a search for a permanent replacement underway. 

“The right candidate must be ready to take action and to rapidly implement significant change to return Vodafone to greatness,” Niel said.

Last week United Arab Emirates-based Emirates Telecommunications upped its stake in Vodafone to 11 per cent, but dismissed rumours that it would make any grand swoop for the British telecoms firm.

Vodafone’s biggest shareholder, once known as Etisalat Group, upped its stake by one per cent, stating that the rationale for investment was “unchanged” from the original plan, which is to “gain significant exposure to a world leader in connectivity and digital service at an attractive valuation”.

Telecoms analyst at PP Foresight Paolo Pescatore told City A.M. that timing of Emirates’ move was likely a coincidence than a calculated strategy.

“The UAE provider is keen to expand beyond its core market. Vodafone’s global and particularly European operations offer plentiful opportunities for both Etisalat and Vodafone to work more closely to bring greater efficiencies and launch new products globally,” he said.