• Iliad’s owner Xavier Niel is spending £4.4bn to buy the 16.21% stake in Vodafone Group that had been built up by Middle East powerhouse e&
• The serial telecom sector entrepreneur has long had an interest in Vodafone, having previously held a smaller stake
• The Frenchman is a fan of slim operations and cost-cutting and has beef with the Vodafone management

Vodafone Group has a new major shareholder in the form of serial telecom sector entrepreneur Xavier Niel, who is spending £4.4bn (€5.17bn/$5.91bn) to buy the 16.21% stake in Vodafone Group that had been built up by Middle East powerhouse e&, which had started building a position in Vodafone in 2022. 

Via an investment vehicle called Vega, set up for this transaction, Niel is acquiring the Vodafone stock currently held by e& for 110.4 pence per share, about 13% higher than Vodafone’s closing share price on 9 July. The move will make Niel the single biggest shareholder in Vodafone Group if the acquisition receives approval from the UK government, though Vega has had to state that its “investment is intended to be a long-term, strategic minority shareholding” and that it “does not intend to make an offer for the entire share capital of Vodafone.” 

As you might expect, news of the transaction, which was issued early on Friday morning, sent Vodafone’s share price soaring by 13.4% to 110.85 pence. 

The news will send shockwaves through Vodafone Group and the telecom sector in general. Niel, the founder and owner of Iliad Group, one of Europe’s largest and most disruptive telcos, is known for running lean operations and being ultra-competitive – and he has previously expressed his disappointment in the way Vodafone is run (we’ll come to that in a minute). 

During the past few decades, as well as building up Iliad from its origins in France to become a major player in Italy and Poland, Niel has acquired stakes in various operators, including Latin American telco Millicom and Ireland’s eir, that he has identified as having great business potential but which have not been efficiently managed. 

One example is Sweden’s Tele2, where he took a minority but controlling stake in early 2024 and subsequently parachuted in a new chairman and CEO: They then announced a major headcount reduction in late 2024 and shortly after purged the management team. Tele2 subsequently announced improving financial results for 2025. 

Niel has even held a smaller stake in Vodafone Group in recent years – a 2.5% stake via his Atlas Investissement vehicle, which was acquired in 2022 but subsequently sold.

But before he offloaded that smaller stake, he got the hump with Vodafone’s management in 2024 when he proposed a merger between Iliad Italy and Vodafone Italy, for which the Vodafone board was seeking a buyer in order to slim down its portfolio. Niel thought he had offered a compelling M&A plan, but Vodafone rejected Iliad’s offer and instead sold its Italian operation to Swisscom, which merged it with its existing business in the country, Fastweb – see Italy has a new mobile leader – Fastweb + Vodafone.

That decision led Niel to tell The Sunday Times newspaper (subscription required) in March 2024: “Being a shareholder, I’m not sure my money is well managed. We’ve lost a lot of money since we bought our shares in Vodafone. And I’m not sure of the management of this company.” In the same interview, he added that Vodafone could still offer “significant value creation” if it rediscovered the “entrepreneurial spirit” it possessed in the early 2000s.

And now he’s back, and Vodafone is being very complimentary. 

Vodafone announced to the London Stock Exchange that “through Xavier Niel’s telecoms investments and businesses, Vega brings exceptional sector expertise and a proven track record of successfully developing high-quality assets at scale. Vega intends to be a committed, long-term shareholder and supportive partner to Vodafone. This investment underscores Vega’s confidence in Vodafone’s long-term growth and untapped value creation potential.” 

In May, Vodafone published its full fiscal year results (to the end of March 2026) which shows that the operator is making decent progress with its plans under group CEO Margherita Della Valle and has even steadied the ship in its largest market, Germany, where it has been struggling with subscriber losses in recent years. Group service revenues increased on a like-for-like basis by 5.4% to €33.5bn, with all parts of the telco’s international operations reporting full year growth except for Germany, which improved over the course of the year and finally achieved year-on-year sales gains in the fiscal fourth quarter. 

So what does Niel think about Vodafone’s current status? He noted: “Vodafone is a compelling investment opportunity, underpinned by quality assets, strong brands, leadership positions and a diversified geographic footprint. As a simpler, more focused business, Vodafone is ready for a new phase of growth and is well-placed to unlock substantial untapped value across its European and African operations. We are confident Vodafone can deliver sustainable growth and strong cash flow generation over the long term and – as an anchor investor based in Europe – we are ready to contribute our deep sector expertise and operational know-how to its future success. As demonstrated by our past investments – including as minority investors in listed companies like Tele2 and Millicom – we have a proven track record of helping businesses to perform better and create substantial shareholder value.”

That final comment suggests Niel has some very particular suggestions in store for the Vodafone management team. 

Kester Mann, director of consumer and connectivity at research and analyst firm CCS Insight, noted in comments shared with TelecomTV that “it will be interesting to see how influential [Niel] wishes to become. His strong ambitions in AI and cloud services could support Vodafone’s enterprise strategy… It will be interesting to see if the deal shapes the strategy going forward.” Those AI and cloud ambitions are being channeled through Iliad’s Scaleway operation, which is aiming to position itself as a key player in Europe’s digital sovereign services sector and which is heading up the AION consortium that is hoping to attract financial support from the European Commission to build an AI gigafactory.

Mann also emphasised that the stake sale doesn’t mean that Vodafone and e& are no longer buddies: The analyst noted that the operational element of that strategic relationship between Vodafone Group and e& that resulted in the initial 2022 stake-building, which spanned procurement, technology, security, enterprise services and more, remains in place and the two companies will continue to work together in some of these areas.

Meanwhile, e& noted in this announcement that its decision to sell its stake “reflects the natural evolution of its strategic priorities, enabling the Group to sharpen its strategic focus on core businesses while unlocking the value created through this investment.” 

The Middle East digital telecom and digital services firm will receive $5.95bn in cash as a result of the sale, comprising the payment it will get from Vega plus a dividend that is due to be paid to Vodafone shareholders at the end of July. The company says it is making a profit of $1.3bn as a result of its Vodafone deals.   

- Ray Le Maistre, Editorial Director, TelecomTV