THE ARRIVAL of a significant new shareholder at Vodafone could force the hand of CEO Nick Read to accelerate plans for consolidation, analysts think.

Emirates Telecommunications Group, also known as Etisalat, has snapped up a 9.8 per cent stake in Vodafone for $4.4bn (£3.6bn).

The United Arab Emirates-based firm has been looking to expand into new markets, including Africa and Europe, and Etisalat group CEO Hatem Dowidar said the investment "represents a unique opportunity to acquire a significant stake in one of the leading and strongest global telecom brands, and a company that we know well".

While Dowidar said he was looking forward to "building a mutually beneficial strategic partnership", it is understood that the telecoms company doesn't intend to buy Vodafone and fully supports the company's board.

However, what the move does do is put enhanced pressure on Vodafone chief Nick Read to accelerate market consolidation.

TMT analyst at PP Foresight Paolo Pescatore weighed in on the recent move and told City A.M. yesterday: "The move itself will raise eyebrows and may lead to some tension with other shareholders who are keen to see Vodafone consolidate in key markets."

"There will now be opportunities for both Etisalat and Vodafone to work more closely to bring greater efficiencies and launch new products in more products globally", he explained.

City A.M. reported last week that Vodafone, the UK's third largest mobile network operator, had reignited merger talks with rival Three.

The two companies floated the idea for a merger last year, but failed to reach a deal, with competition regulation in the UK presenting significant hurdles for the companies.

Vodafone has already been under increasing strain to speed up its organisational overhaul after it was revealed earlier this year that a notorious activist investor Cevian had taken a stake in the firm.

Despite Vodafone's recent rejection of Italy's Iliad and private equity titan Apax Partners' takeover approach, it is understood that Cevian is keen for Vodafone to pursue consolidation in key markets.

(c) 2022 City A.M., source Newspaper