A tiny investment firm backed by the former deputy chairman of telecoms equipment maker Marconi has called on mobile phone giant Vodafone to free up 38 billion pounds ($76 billion) of assets to return to shareholders.
The move is the latest attempt by activist investors to extract windfall returns from companies after hedge fund TCI successfully lobbied Dutch bank ABN to put itself up for sale. It also fuelled recent speculation that British-based Vodafone may be broken up and sent its shares up as much as 3.5 percent to top gainers on the UK's FTSE-100 index.
However, analysts said the investment group, called Efficient Capital Structures (ECS), was far too small to force through change at Vodafone without garnering support from much more powerful investors, which they said was doubtful.
ECS is the latest in a series of small investment groups created to force companies to free up cash for shareholders. It is backed by corporate financier Glenn Cooper and John Mayo, the chief executive-designate of Marconi in 2001 when it issued a savage profit warning.
ECS, which owns 210,000 of Vodafone's 52.9 billion shares, said on Thursday it had drawn up four resolutions to be put to Vodafone's annual shareholder meeting on July 24. The resolutions include handing over to Vodafone investors shares in Verizon Wireless, the US joint venture in which the group holds 45 percent, and bonds worth 34 billion pounds.
Vodafone, the world's biggest mobile phone group outside China, said it was reviewing the proposals but declined to comment further. Analysts said the group, which cancelled a meeting due to take place with ECS, was unlikely to agree to the proposals, which would include raising its debt level to 4.5 times earnings before interest, tax, depreciation and amortisation (EBITDA) from around two times now.