If he sees sense in what the Cevian activist thinks, he can easily go aggressive.
Its enigmatic new name is not the only thing that is puzzling about e&. The Persian Gulf-based telecoms giant, formerly known as Etisalat, has invested $4.4 billion in a 9.8% stake in vodafone. CEO Hatem Dowidar says he is content to be a passive minority. He wants no board seats and has endorsed Nick Read and his strategy. But with activist Cevian Capital pushing for changes, including a possible breakup, that passivity may not last.
With $600 million of net cash on its books, the $75 billion e& has plenty to spend. And Vodafone seems cheap. Including debt, it is valued at only 5 times the ebitda forecast for 2023, half the multiple of its new shareholder. The poor results justify the discount. Vodafone’s revenues are growing at an anemic 1% annually and its EBITDA margin remains at 33%. If Dowidar sees sense in what Cevian is thinking, it will be easy for him to go from passive to aggressive.