Vodafone sees Elliott building stake

Elliott Advisors has built a position in Vodafone Group [LON: VOD] and is pressing for changes at the telco provider, according to two sources familiar with the situation.

The exact size of the stake in the London-based company could not be learned but both sources said it is significant. Vodafone has a market cap of GBP 47.87bn.

The London Stock Exchange requires shareholders to disclose holdings of more than 3% of the share capital of a listed company.

Elliott Advisors – the European arm of Elliott Management – first approached the company several weeks ago, both sources said. The activist has held conversations with management and at least one representative of the board as part of its engagement, one of the sources said.

The current CEO transition was a catalyst for Elliott, both sources said.

Vodafone’s longstanding CEO, Vittorio Colao, announced in May he will leave his position in October, after more than 10 years at the company. He will be succeeded by CFO Nick Read.

During Colao’s tenure, the company strengthened its business customer offerings, launched converged packages, and restructured its global portfolio to exit minority holdings and focus on those that it controls.

An investment in Vodafone would mark the activist’s second foray into European telcos this year.

Elliott had success with its campaign at Telecom Italia [BIT:TIT], where it won a proxy fight with Vivendi [EPA:VIV] over boardroom control. The activist was able to appoint the majority of directors to the board after the 4 May AGM, effectively pushing 24% investor Vivendi to the sidelines.

Elliott’s campaign has targeted a sale or spin-off of Telecom Italia’s regulated network business as well as corporate governance changes.

Vodafone and Elliott declined to comment.

by David Carnevali in New York, with additional reporting by Samantha Tomaszczyk and William Mace in London