Vodafone global strategy questioned by large investor

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Standard Life Investments on Monday night became the first big investor in Vodafone, the UK’s fifth largest company by market value, to criticise publicly the telecom group’s global strategy.

The fund management group, Vodafone’s 9th largest shareholder, is pressing the telecom company to sell off its 45 per cent holding in Verizon Wireless, the fast-growing US network operator. The US company is estimated to be worth up to £25bn.

David Cummings, head of UK equities at Standard Life Investments, on Monday said: “We are very supportive of a sale of Verizon. It would give a massive earnings uplift and there is a willing buyer in Verizon.”

He said Vodafone could then focus on its European and Asian businesses.

“The share price is showing that the market has lost confidence in the company’s global strategy, rating it more like a utility company,” he added.

Mr Cummings’ statement reflects growing investor concern about Vodafone’s performance. The shares have fallen 12 per cent in the past year to 121p, and 22 per cent since last year’s high of 155p in August.

Vodafone is due to report key performance indicators on Tuesday but the market is expecting lacklustre figures, notably from Germany and Italy.

Some shareholders have been pressing for a change in strategy. The company has embarked on a run of global acquisitions in recent years.

Other shareholders have expressed a growing lack of confidence in the management and Arun Sarin as chief executive.

One of the top 10 shareholders on Monday said: “There is a range of views on the solutions but the common theme is the question about executive management.”

The group is holding a series of meetings with shareholders in the next few days, some of whom said they would wait until Sir John Bond, the incoming chairman, took up his position in July before taking further action.

According to one source, Sir John, former chairman of the bank HSBC, is well aware of shareholder discontent and is primed to act upon his arrival at Vodafone.

F&C Asset Management said it would wait to see if there was a further deterioration in performance before reviewing its holding.

Upin Dattani, F&C’s telecom analyst said: “We would look for further information to see what the group’s strategy is at the full year results in May.”

However, a number of Vodafone’s leading shareholders yesterday said that, given the size of the company and its poor share price performance, the company needed to do something sooner to restore shareholder confidence.

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