Liberty Global grabs £1.2bn stake in Vodafone

Liberty Global took a stake of almost 5pc in Vodafone as it pins its hopes on the share price bounce-back through acquisitions and cost-cutting plans.

The US-based telecoms giant said it bought 1.3bn shares, representing a 4.92 per cent stake worth £1.2billion in the company, but confirmed it would not seek a board seat or make an offer for Vodafone.

Mike Fries, Liberty chief executive, said: ‘The stock’s cheap – it’s an opportunistic and financial investment.’

Vodafone said it bought 1.3bn shares, representing a 4.92% stake worth £1.2bn in the company, but confirmed it would not seek a board seat or make an offer for Vodafone

Fries added that Vodafone had some ‘interesting catalysts’ for potential value creation, including a proposed merger with rival Three UK – owned by CK Hutchison – for which talks are continuing.

‘We only have one market with four mobile players – everyone else has consolidated to three – Ireland, Belgium, Holland, Switzerland. 

The UK is an anomaly,’ he said. The deal was financed mostly through derivatives, Liberty said, and required £225million in equity funding from the Denver-based group. 

Vodafone shares jumped 2.1 per cent following the news, countering its steady decline on the FTSE 100.

The Berkshire-based firm has lost more than half its value in the past five years as it struggles to perform in its largest markets and continues to fall short against competitors. 

A number of major telecom players have built up stakes in Vodafone in recent years, including French billionaire Xavier Niel, who bought a 2.5 per cent stake in September, and United Arab Emirates telecommunications giant e&, which has a 13pc stake.

Karen Egan, head of mobile at Enders Analysis, said the latest move from Liberty was ‘opportunistic’.

‘A 5 per cent stake will give them a voice and Liberty will be keen on deal-making – something that Vodafone has been accused of being too reluctant to do.’

Liberty Global owns Virgin Media O2 in partnership with Spanish giant Telefonica.

It has also invested in 75 companies across telecoms, media and infrastructure.

Paolo Pescatore, telecoms analyst at analysts PP Foresight, called Liberty boss Fries a ‘shrewd operator’ who could cash in on the frenzy surrounding Vodafone.

Another element at play is the firm’s ongoing leadership race to replace the ousted Nick Read, who departed the firm in December. 

Chief financial officer Margherita Della Valle, who stepped up to the top spot on a temporary basis, has refused to rule herself out as a permanent fixture.

It is rumoured that former EE chief Olaf Swantee is frontrunner.

Vodafone declined to comment on Liberty’s stake.