Vodafone ousts CEO Nick Read after commercial challenges
VODAFONE Group’s chief executive officer (CEO), Nick Read, will step down at the end of 2022 after he was unable to halt a years-long slide in the telecommunication giant’s share price, and mergers with major rivals that failed to materialise.
Chief financial officer Margherita Della Valle will do the job on an interim basis while the board, led by chairman Jean-Francois van Boxmeer, seeks a replacement. Read, who had been in the post for four years and at Vodafone for more than two decades, will stay on an as adviser until the end of March, said the company on Monday (Dec 5).
Read, 58, said: “I agreed with the board that now is the right moment to hand over to a new leader who can build on Vodafone’s strengths and capture the significant opportunities ahead.”
Vodafone’s share price has sunk 44 per cent since he took over in October 2018. In that time, the English mobile and broadband giant has retrenched employees and cut debt.
Read’s biggest move may have been to spin out and list the company’s tens of thousands of mobile masts, just selling a stake in Frankfurt-listed listed Vantage Towers to a private equity consortium in a deal that valued the business at 16.2 billion euros (S$23.1 billion) last month.
Still, Read struggled to finalise deals that would have reduced the number of players in some of Vodafone’s biggest markets, such as the UK, Italy and Spain. An approach for the Italian business was rebuffed, a merger opportunity in Spain was missed, and talks with UK rival Three, owned by CK Hutchison Holdings, are public but have yet to conclude.
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Vodafone shares rose 1.9 per cent to 92.90 pence in London trading as at 8.20 am. The share price level remained close to 25-year lows.
The company’s challenges deepened in 2022 after Russia’s invasion of Ukraine sent energy costs soaring, while interest rates also rose. Read faced pressure from investors, including Cevian Capital, Europe’s largest activist fund, which sold much of its stake in the English company earlier this year.
More recently, an investment vehicle backed by French billionaire Xavier Niel bought 2.5 per cent of Vodafone, citing opportunities to accelerate deals and improve profits.
Berenberg analyst Carl Murdock-Smith said that Read’s possible successor may already have some link with Vodafone, as the company has never appointed an external CEO. He pointed to Informa CEO Stephen Carter, who serves on Vodafone’s board and was previously head of UK telecom regulator Ofcom. He also identified Nick Jeffery, who was previously Vodafone’s UK head and left the company last year to run US-based Frontier Communications.
Read’s replacement will also face commercial challenges.
Jefferies analyst Jerry Dellis said: “Vodafone faces intractable headwinds with Germany punching below its weight, the cost-of-living crisis weakening support for market repair and the most readily deliverable transaction already announced.” He added that leverage remains “uncomfortably high” after the Vantage deal, and that the dividend policy should be treated as under review. BLOOMBERG
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