Vodafone Group Plc’s biggest shareholder is pushing ahead with an ambitious global expansion strategy, undeterred by a slump in the British carrier’s share price that’s wiped out a chunk of its most high-profile investment.

Abu Dhabi-based Emirates Telecommunications Group this week said it will pay €2.15 billion ($2.4 billion) for a controlling stake in some of PPF Telecom Group’s assets in Eastern Europe. The deal marks the Gulf firm’s second large foray into Europe since May last year, when it splashed out $4.4 billion for just under 10% of Vodafone.

It’s since raised that holding to about 15% over a period that’s seen the UK firm’s shares shed more than a third of their value and languish at their lowest levels in 25 years. Executives have indicated that the firm could add to its stake.

The $60 billion firm, backed by oil-rich Abu Dhabi, has been mandated by the government to continue pursuing opportunistic deals, according to people familiar with matter, who asked not to be identified as the information isn’t public.

It counts UAE federal wealth fund, Emirates Investment Authority, as its biggest shareholder, giving the government — particularly in Abu Dhabi — sway over decision making.

‘Growth Phase’

Previously known as Etisalat and rebranded as e&, Emirates Telecom is now emerging as one of Abu Dhabi’s top overseas investors along with its various sovereign funds. Its expansion plans fit with the emirate’s ambition to grow state-owned entities through acquisitions, creating companies with large international footprints.

In the past decade, other Abu Dhabi entities have attempted the same, with mixed success. National carrier Etihad bought stakes in various European and Asian airlines to build a global airline to compete with Dubai’s Emirates, a strategy that ultimately culminated in huge losses.

While Emirates Telecom’s shares have slumped by a third since the Vodafone deal was announced, the government’s 60% stake insulates it from short-term fluctuations. The downturn in the broader global economy and depressed asset valuations have also presented an opportunity for the firm, which earlier this year hired former Morgan Stanley executive director Ilya Kiykov as head of M&A.

Emirates Telecom is in a growth phase and has the “capacity and the wallet” to do deals this year, Chief Executive Officer Hatem Dowidar told Bloomberg TV in March. The firm will look at opportunities in Europe, Asia and Africa, he said at the time.

It considered making a bid for Deutsche Telekom AG’s Dutch unit in 2021 — before it bought into Vodafone — but eventually backed away, people familiar with the matter said. That business was eventually sold to buyout firms Warburg Pincus and Apax Partners for €5.1 billion.

A representative for Emirates Telecom declined to comment.

What Bloomberg Intelligence Says:

“More M&A is plausible, with the agreement with PPF more in line to Etisalat’s plan to expand into adjacent segments and geographies than the targeted 20% Vodafone stake.”

— John Davies, BI telecoms and media analyst

Closer home, Emirates Telecom bought a $400 million stake in the super app developed by Uber Technologies Inc.’s Middle Eastern subsidiary in April and is seeking to increase its shareholding in Saudi Arabia’s Mobily in a deal that could be valued over $2 billion.

The firm is also considering buying into Ethiopia’s state-controlled telecom operator and has explored an offer for part or all of Vodafone’s stake in Johannesburg-listed Vodacom, Bloomberg has reported.

The flurry of deals will help the firm chase growth outside the UAE. “We believe that although domestic market is saturating, international markets offer strong underlying growth potential,” analysts at Citigroup Inc. wrote in a note on Tuesday.

Emirates Telecom isn’t alone in its international ambitions. Other state-backed Middle Eastern carriers are also ramping up overseas. Saudi Telecom Co. agreed to buy a portfolio of tower assets from United Group for €1.22 billion in April.

Troubled History

Emirates Telecom has a checkered history overseas. In Pakistan, it was embroiled in a years-long dispute that cost millions of dollars and the firm was forced to book an impairment for canceled licenses in India before abandoning plans to operate in the country.

Burnt by those costly setbacks, for years it focused on organic growth until its surprise acquisition of a stake in Vodafone, which is now showing some potential. Dowidar sits on the board of Vodafone and the firm can nominate a second non-executive director if its stake exceeds 20%, handing it a greater degree of control on strategy.

Read More: Etisalat’s Unfocused M&A History Justifies Caution for Future

Although Emirates Telecom is likely to keep pursue more M&A, its recent deal with PPF was “closer to the stated plan to expand into adjacent segments and geographies than what looks like a sustained raising of its Vodafone stake,” according to Bloomberg Intelligence’s Davies.

--With assistance from Farah Elbahrawy.

Author: Dinesh Nair, Nicolas Parasie and Adveith Nair