OUTLOOK: Has Vodafone Bought a Turkey, or Is This an Inspired Bet on Europe's Eastern Frontiers?
Warner, Jeremy, The Independent (London, England)
There's no quarrel with the strategy; it's the price that fair takes the breath away. Vodafone is paying more than six-times sales and about 50 times Ebitda for Telsim, Turkey's second-largest mobile phone operator. What's more, it will need to invest $1.2bn upgrading the network over the years ahead and the acquisition will remain earnings dilutive, even on Vodafone's own numbers, for at least three years.
Should a company already under pressure to dispose of assets so that the proceeds can be returned to shareholders really be splashing out pounds 2.6bn for such an apparently expensive trophy? In the heyday of the technology bubble, investors wouldn't have thought twice about backing such an apparently high-risk bet.
In today's more sober investment climate, Arun Sarin, the chief executive, is left with quite a bit of explaining to do. He's had some disappointments in the past year, and investors are in no mood to give him the benefit of the doubt. …