Vodafone Group’s Spanish business is attracting takeover interest from potential buyers, people with knowledge of the matter said.

The British telecommunications group has been contacted by private equity and strategic suitors, according to the people. While it’s not running a formal sale process for the unit, Vodafone would consider offers at the right price, they said.

Vodafone’s Spanish unit could be valued at more than US$4-billion (R72-billion), the people said, asking not to be identified discussing confidential information.

Vodafone’s business in Spain has been shrinking in the face of competition

Deliberations are ongoing and there’s no certainty they’ll result in a sale of the Spanish operations. A representative for Vodafone declined to comment.

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Vodafone’s business in Spain has been shrinking in the face of competition from incumbent carrier Telefónica, France’s Orange and private equity-backed Masmovil Ibercom. From 2018 to 2022, its revenue generated in the country fell 16% to about €4.2-billion (R83-billion). 

Nick Read, Vodafone’s former CEO, sought a merger in Spain last year, only to miss out when Orange and Masmovil agreed to combine there. Read left at the end of 2022 and interim CEO Margherita Della Valle has since relegated Spain from one of Vodafone’s main markets, folding it into a group of smaller units such as Ireland and Greece. Colman Deegan departed as Vodafone’s CEO in Spain in March.

Newbury, England-based Vodafone has been under pressure to simplify its business and pursue deals to unlock value for investors and revive a flagging share price that’s fallen almost 60% over the last five years.

Vodafone has been largely frustrated in these efforts. While it managed to sell smaller units in countries like Hungary and a stake in its mast unit, Vantage Towers, it struggled with transactions in larger markets.

As well as missing out on a Spain deal, Vodafone last year rebuffed an offer from French telecoms billionaire Xavier Niel for its Italian unit. Months-long talks about a British merger with Three UK, meanwhile, have yet to close.

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Strategic investors and some-time rivals Niel, Emirates Telecommunications Group Company and Liberty Global have bought up more than a fifth of Vodafone in the last year, raising questions about how they might influence strategy at the British group.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry

Options could include merging the business with other operators or selling a stake in the company.

Vodafone Group is exploring options for its African business as investors ramp up pressure on the UK telecommunications company to boost performance, people familiar with the matter said.

The London-listed firm is working with advisers to study ways to extract more value from its 65% holding in Vodacom Group, the people said, asking not to be identified as the matter is private. The early-stage considerations range from merging the business with other operators or divesting some assets in certain markets, to selling a stake in the company, the people said.

Vodacom has a market value of about R260-billion on the JSE after declining about 17% in the last 12 months. Vodafone is down almost 30% in that time period, valuing it at £26.8-billion (R580-billion).

Etisalat, Vodafone’s largest shareholder, has been exploring a potential investment in Vodacom

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While Vodafone has always seen the African unit as a core part of the group, the exercise shows that it’s willing to study a wide range of alternatives as it casts around for a way to stem a decline in its shares. Billionaire John Malone’s Liberty Global disclosed a 4.9% stake in Vodafone on Monday, joining other strategic investors French billionaire Xavier Niel and state-backed Emirates Telecommunications Group, formerly known as Etisalat and now called e&.

There’s no certainty the deliberations will lead to any transaction. A representative for the UK carrier said that Vodacom “is a strong business that is an important part of Vodafone” and there are no ongoing discussions about a potential sale. A representative for Vodacom declined to comment.

Etisalat, which is Vodafone’s largest shareholder, has been exploring a potential investment in Vodacom. It has been studying the possibility of buying Vodafone’s stake in Vodacom or merging its own African operations with Vodacom, people with knowledge of the matter said at the time. Vodafone’s holding in the African business may also attract interest from other bidders, according to the people.

Vodafone has been selling assets and replaced its chief executive Nick Read late last year as it has come under attack from activist investors due to its poor performance. Last year, it sold a stake in Frankfurt-listed Vantage Towers unit to a private equity consortium in a deal valuing the business at €16.2-billion (R312-billion).

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The British company has been consolidating its interests on the continent under Vodacom, which provides services in countries including South Africa, Tanzania and the Democratic Republic of Congo. Vodafone’s stake in Vodacom increased to 65% after it completed the sale of its Egyptian business to the South African unit, according to a regulatory filing Monday.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry