Not satisfied with Virgin Media and O2 merger, Liberty Global takes 5% Vodafone stake

Looks financially driven, says analyst, but don't rule out bigger moves in future

Liberty Global has acquired a stake in British telecoms outfit Vodafone, but denied it has plans for a takeover bid. The US-based group is the parent company of Virgin Media, which merged with UK telco O2 in 2021.

The multinational company has acquired 1.3 billion Vodafone shares, accounting for a 4.92 percent stake in the telecoms biz.

Liberty Global chief executive Mike Fries said in a statement: "We believe, like many others, that Vodafone's current share price does not reflect the underlying long-term value of their operating businesses, or their announced consolidation and infrastructure opportunities."

Vodafone is one of the world's largest mobile telecommunications companies, with holdings in Africa, the Middle East and the Americas and was one of the original founders of the Verizon network in the US. However, its share price has fallen by more than 30 percent over the past year or so, making it ripe for opportunistic purchases.

Liberty Global already has a sizable stake in the UK market following the merger of its Virgin Media TV and broadband business with Telefónica's O2 UK mobile network in 2021.

Liberty Global has already swallowed Vodafone's Dutch mobile network operation, merging it with its subsidiary Ziggo in 2016.

"Fries is a shrewd operator and has a proven track record of delivering on these sorts of deals," PP Foresight telecoms and media analyst Paolo Pescatore told us, adding: "There's a frenzy of activity around Vodafone in light of recent changes and corporate activity."

This frenzy of activity included the departure of chief executive Nick Read in December due to the plunge in Vodafone's market capitalization, and investors buying then swiftly selling shares in the company.

Vodafone was also in negotiations with CK Hutchison, the owner of Three UK, over merging the British operations of the two businesses to form what would be the country's largest telecoms concern.

The purchase of a substantial shareholding in Vodafone brings to mind the creeping acquisition of BT shares by French telco billionaire Patrick Drahi, owner of telecoms outfit Altice.

Like Fries, Drahi has denied that he intends to take over BT, but has increased his stake in the business several times to the point where Altice now owns 18 percent, making it the largest shareholder.

The matter was last year investigated by the UK government's Department for Business, Energy & Industrial Strategy (BEIS), which ultimately decided that no intervention was necessary.

"This is a pure financially driven opportunistic move – for now," said Pescatore of the Vodafone share purchase. "There could be an ulterior motive behind the scenes, given the close relationship of the two companies in the Netherlands and previous attempts to come together in other markets like the UK. Therefore, we cannot rule out other moves in the future." ®