Vodafone takes up to €1.1bn hit from Drahi’s German broadband deal
Patrick Drahi’s sale of 50% stake in OXG will deprive joint venture partner Vodafone of potentially substantial future earnings
Vodafone will miss out on over €1bn of potential earnings after Patrick Drahi struck a deal to sell his stake in their German broadband joint venture OXG, in a move which saw the billionaire escape liability for previously agreed payments.
The UK telecoms group was in line to receive deferred payments of €487mn and a potential €595mn earnout from Drahi’s Geodesia Holding, provided OXG achieved certain milestones and business performance objectives.
However, Société Générale, which agreed to acquire Drahi’s 50 per cent in OXG this month, will not be subject to the same commitments, according to people familiar with the deal terms. Vodafone has not informed investors of the change.
The FTSE 100 group said its decision to partner with Drahi had provided “the best option between rollout funding certainty and strategic flexibility, and that was reflected in the terms that were agreed”.
“We’re supportive of their exit and replacing them with SG as a committed investor,” Vodafone added.
At the time that Vodafone partnered with Drahi’s telecoms business Altice to launch OXG in 2023, the French-Israeli billionaire was already grappling with the impact of higher interest rates on his telecoms empire, which had been financed with billions of dollars of junk debt.
New Street Research analyst James Ratzer said that Vodafone’s choice of Drahi, who in June agreed a deal to sell his French telecoms business SFR for €20.35bn to alleviate debt problems, as its partner had proven “to be the wrong one”.
“Given Drahi’s guarantees [on OXG] were renewed last year and he is due to receive cash from the SFR deal, we are surprised Vodafone has walked away from its expected proceeds,” he added.
Xavier Niel acquired a 16 per cent stake in Vodafone in July, becoming the FTSE 100 company’s largest shareholder. The French telecoms billionaire has since increased his stake to 19 per cent.
OXG committed to spend €7bn to roll out fibre broadband to more than 7mn homes in Germany over a six-year period following its launch. However, higher-than-expected build costs have slowed progress, with the network reaching just 1mn homes as of September 2026.
The first of Drahi’s deferred payments was not due until OXG passed 1.5mn homes and Vodafone had not been expecting to receive any payment until at least its 2028 financial year, according to a person familiar with the matter.
Drahi’s stake in OXG has been heavily scrutinised by creditors to his telecoms group Altice International after he controversially shifted his holding in the broadband venture — along with several other assets — out of the reach of lenders owed €8bn.
For Vodafone, the lost earnings come as it is being forced to repay the additional income it received from a €5-a-month price increase that it imposed on broadband customers in Germany in 2023.
The European Court of Justice last week ruled that EU telecommunications law does not give providers an automatic statutory right to unilaterally amend their general terms and conditions.
New Street Research estimates that the ruling could cost Vodafone between €100mn and €200mn in repayments.
Altice declined to comment.