Vodafone pays out more than $1bn in advisory fees since 2000

Vodafone

Vodafone has paid out more than $1bn in fees to advisers over the last two decades amid ambitious empire-building followed by a costly retreat.

The British telecoms giant has spent huge sums on bankers and lawyers as part of long-running turnaround efforts, with data from Dealogic revealing that “in excess” of a billion dollars has been spent on advisors since 2000.

The figures show the scale of dealmaking at Vodafone, which has failed to boost the company’s share price beyond what it was around 30 years ago.

Vodafone’s heyday came in the wake of its mammoth $190bn takeover of German rival Mannesmann in 2020, which remains the largest corporate takeover in history.

The deal formed part of Vodafone’s expensive flag-planting campaign during the 1990s and early 2000s as it sought to build a global mobile empire.

But the spate of acquisitions has failed to pay off for Vodafone, as bosses now attempt to slim down operations.

Last year, Vodafone sold its Spanish business for €5bn after struggling with tough competition and low returns.

The FTSE 100 firm also remains in talks about a potential deal in Italy, after last month rejecting a revised offer from French telecoms company Iliad to merge their businesses in the country.

Vodafone’s Indian venture has also been fraught with problems after paying $11bn for mobile network Hutchison Essar in 2007.

In 2020, the London-listed group was forced to provide a $200m cash injection to its loss-making Indian telecom operator, Vodafone Idea, after fierce competition left the business on the brink of collapse.

This came six years after it completed the $130bn sale of its 45pc stake in US mobile operator Verizon Wireless.

Meanwhile, Vodafone is still reeling from its €18.4bn takeover of Liberty Global’s cable network in Germany in 2019, which has weighed heavily on the company’s balance sheet.

Shares have slumped by 55pc over the last five years and are trading at levels last seen in 1996 – well below their peak at the turn of the millennium.

The company has now inked a £15bn deal to merge with Three in a deal that will create the UK’s largest mobile network.

Bosses have said the tie-up is necessary to give the companies enough scale to invest in their networks amid tough competition in the market.

However, it is facing regulatory investigations on national security grounds given Three’s ownership by Hong Kong-based conglomerate CK Hutchison.

The planned merger comes amid increasing scrutiny of the United Arab Emirates’s (UAE) control over Vodafone after the Gulf state last year became Vodafone’s largest shareholder with a 14.6pc stake worth £2.7bn.

Ministers warned last month that Vodafone, which holds sensitive Whitehall contracts and operates vital UK infrastructure including undersea cables, is vulnerable to “material influence” by the UAE.

Margherita Della Valle took over as Vodafone’s chief executive last year – Vodafone

Meanwhile, the Competition and Markets Authority is expected to launch a review into the proposed tie-up with Three following concerns that it could result in higher prices for consumers.

Vodafone has hired Morgan Stanley and Robey Warshaw, George Osborne’s boutique Mayfair-based investment bank, to advise on the transaction.

The deal is part of a wider structural overhaul being pushed through by chief executive Margherita Della Valle, who said the firm “must change” when she took over the top job last year.

Ms Della Valle has said the company must simplify its sprawling operations as it looks to return to growth. She has also outlined plans to cut 11,000 jobs.

A Vodafone spokesman said: “We have announced a significant number of acquisitions and disposals during this period, including the largest and fourth largest corporate transaction ever – Mannesmann and Verizon Wireless.

“The sale of our stake in Verizon for $130bn included returning $84bn to shareholders.”

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