London (Reuters) -On Monday morning, shares of Vodafone (NASDAQ: VOD) went up 4% after the United Arab Emirates-based telecoms company said it had bought a 9.8% stake in the British mobile operator.
e&, which used to be called Emirates Telecommunications Group, said it had no plans to make an offer for all of Vodafone and that it had already invested $4.4 billion at a “attractive valuation” to get a variety of currencies.
The company said it fully supported Vodafone’s board, which has been under pressure from other investors after the group struggled in its mature European markets, where competition and regulations have pushed prices down.
Nick Read, the CEO of Vodafone, has said that he will lead a wave of consolidation in Europe to rebuild markets and increase profits. However, in the past few months, he has turned down an offer for the group’s assets in Italy and missed out on a deal between rivals in Spain.
At 07:32 GMT, Vodafone shares were up 3.1% to 121.50 pence. Since Read was promoted from finance director to CEO in October 2018, the stock has dropped by about 25%.
Even though it had failed to make deals in major markets, Paolo Pescatore, an analyst at PP Foresight, said that Vodafone’s investment in the UAE was a strong vote of confidence in its strategy and board.
“The move will make people wonder what’s going on, and it could cause tension with other shareholders who want Vodafone to consolidate in key markets,” he said.
“Both Etisalat and Vodafone will have more chances to work together to improve efficiency and launch new products in more places around the world.”