‘France’s answer to Steve Jobs’ buys 2.5% stake in Vodafone

Investment vehicle of tech disruptor Xavier Niel cites chance to spur ‘streamlining’ of UK telecoms group

The French telecoms billionaire Xavier Niel has acquired a 2.5% stake in Vodafone, citing opportunities to accelerate a “streamlining” of the London-listed group’s business.

Niel, who founded the telecoms company Iliad, has taken the stake through his investment vehicle Atlas Investissement, which said it was “supportive of Vodafone’s publicly stated intention to pursue consolidation opportunities”.

The 55-year old has spent his career as “the French Steve Jobs”, disrupting the country’s established tech and telecoms incumbents while building an $8bn (£7bn) personal fortune.

Not that he needs the money: his partner of more than a decade is Delphine Arnault, daughter of France’s richest man, Bernard Arnault, and heiress to the vast luxury conglomerate LVMH that made her father a $154bn fortune.

In February, Vodafone’s chief executive, Nick Read, confirmed it was in talks with rivals in its biggest markets. Read has argued that the European telecoms industry needs to consolidate to create more profitable businesses that are more attractive to investors.

That month Vodafone rejected an €11.25bn (£9.8bn) offer from Iliad, also owned by Niel, which operates in France, Italy and Poland, for its Italian operation.

Niel’s other business interests include French newspaper Le Monde, which he saved from bankruptcy, along with two other high profile investors, in 2010. Two years ago he expanded his media portfolio, buying French horse racing paper Paris-Turf, a daily newspaper in the French West Indies and the Nice-Matin newspaper group.

He also has a five-star hotel in the ski resort of Courchevel, and has set up a successful tech school that has no teachers, no books and no fees for 1,000 students. But his business empire is rooted in telecoms.

A few years after receiving a Sinclair ZX81 as a Christmas present, Niel dropped out of education at 19 to create his first business, Minitel, a forerunner of the internet that offered sex-oriented chat services.

While Niel went on to sell off most of his pornography interests, he kept two sex shops which ultimately would lead to a brush with the law and a two-year suspended prison sentence for misuse of company assets.

In the mid-1990s he invested in the first internet provider in France, selling out just before the internet bubble burst in the early ’00s, and went on to create his own company, Iliad.

Iliad is best known for its revolutionary service called Free, which shook up the French market with free internet access, subsequently developed into a hugely successful low-cost broadband and mobile model that Niel has replicated to shake up markets he has entered with his telecoms investments.

Last year, Niel moved to take Iliad private because of the “high volatility of the telecoms stock market in general and Iliad’s share price in particular”, according to group chief executive Thomas Reynaud.

Niel joins the French-Israeli billionaire Patrick Drahi in targeting the UK telecoms market. Last year, Drahi built an 18% stake in BT, making him the company’s largest investor. In August, the UK government ruled that the stake did not pose any national security concerns.

Sweden’s Cevian is another activist investor that has taken advantage of the weak performance of Vodafone shares, which have almost halved since 2018, building up a stake in January.

In May, the United Arab Emirates’ biggest telecoms provider, e&, bought a 9.8% stake in Vodafone.


Contributor

Mark Sweney

The GuardianTramp

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