(Bloomberg) — Coast Capital has built up a stake in Vodafone Group Plc, becoming at least the second activist investor to bet on the British telecommunications carrier in recent months.
The investment firm has amassed a holding in Vodafone and is still adding to its position, Coast Capital founding partner James Rasteh said in an interview Monday. Coast Capital backs the strategy of Vodafone’s top executives but is critical of regulatory moves that have crimped the company’s profits in some areas, he said.
“We’ve built an important position in Vodafone after conducting detailed work with leading operators in the sector,” Rasteh said. “We are long-term supportive of the management, but we have made it clear to the regulators that their overreach has been destructive and is going to dissuade institutional investors from investing in the sector.”
The latest interest in Vodafone comes as fellow activist investors — impatient for returns — increasingly target some of the U.K.’s largest companies. Those under the spotlight now include Unilever Plc, GlaxoSmithKline Plc and Shell Plc.
In January, Bloomberg News reported that Cevian Capital AB had built a stake in Vodafone and was speaking to company officials about improving its performance. Options to boost value at Vodafone could include consolidating its presence in key markets, selling some operations or pursuing stock buybacks. Iliad SA, the French carrier backed by telecom billionaire Xavier Niel, has made an offer for Vodafone’s Italian unit, people familiar with the matter said on Monday.
Coast Capital has previously taken stakes in U.K. companies like automation software Blue Prism Group Plc, where it spoke out against Vista Equity Partners’ aborted takeover bid. It also previously ran a campaign at FirstGroup Plc, pushing for a divestment of the bus operator’s U.S. business and later criticizing the way the sale process was run.
Shares of Vodafone have risen 22% in London trading this year, giving the company a market value of about 37 billion pounds ($50 billion).
A representative for Vodafone couldn’t immediately comment. A spokesperson for U.K. telecom watchdog Ofcom said it has a long track record of supporting investment and protecting consumers.
Last year, Ofcom confirmed its approach for regulating the wholesale fixed-line market, which it said “unlocked billions of pounds of investment” for homes to get faster connections. Ofcom will soon set out its proposal for wireless markets, with “supporting investment and innovation a central part of our strategy,” it said in a statement Monday.
(Adds detail on Iliad offer in fifth paragraph.)
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
