In the world of European telecoms, the news had the effect of a small bomb. Since last week, Vodafone has had to deal with a cumbersome shareholder: the Swedish activist fund Cevian Capital. His speciality ? Enter the capital of“strong companies” corn “neglected, misunderstood or badly perceived by investors”, he explains on his website. His goal ? “Generally act as a reference shareholder or as an external catalyst for change”. Clearly, if things don’t go the way he wants, Cevian raises his voice. He had thus maneuvered at Rexel, of which he still holds 20% of the capital, to obtain in 2017 the departure of the general manager of the French distributor of electrical equipment.
At Vodafone, Cevian does not have the same weight. The fund, which makes no comment, would barely have 3% of the capital. But his presence is enough to energize the British number three in telecoms. Asked Wednesday, February 2 during the presentation of the operator’s quarterly results, Nick Read, its managing director, kicked into touch. Better to discuss in private with this kind of shareholders.
Created in 2002 by Lars Förberg and Christer Gardell, Cevian has built a solid reputation in Europe, becoming the first activist fund on the continent with a strike force of around 15 billion dollars (13.3 billion euros ). Money entrusted to him by pension funds, foundations and sovereign wealth funds, in the hope that he will make it bear fruit.
“heavy investments”
For this, Cevian likes stories that require you to roll up your sleeves, such as the German steelmaker Thyssenkrupp, the Danish bank Danske Bank or the Swedish telecom equipment manufacturer Ericsson. His entry into Vodafone is no exception: it illustrates the weaknesses of the British operator, whose stock market value has fallen by half in five years and, more broadly, of an entire sector.
“Operators’ revenues are under pressure, in particular due to competition which is forcing price increases, and they must at the same time make heavy investments to deploy optical fiber and 5G. Difficult to solve the financial equation under these conditions », explains Denis de Paillerets, global co-head of TMT (technology-media-telecoms) at Société Générale. According to the rating agency Fitch, European operators have invested more than 220 billion euros in four years.
The American Elliott, the largest activist fund in the world, tried its hand at telecoms by overthrowing the board of directors of Telecom Italia, the operator controlled by Vivendi, in 2018. But the war of positions initiated by the group of Vincent Bolloré got the better of his motivation. Above all, at the time, the sector was perhaps not as mature as it is today to initiate its reform.
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