Can Vodafone deliver better after Nick Read’s exit?

Vodafone CEO Nick Read, who resigned today after spending 20 years at Vodafone, will be remembered for completing some of the complicated deals and achieving almost consistent growth in the last four years.
Vodafone service revenue growthVodafone achieved service revenue growth of 3.3 percent in first quarter of fiscal 2022, 2.4 percent in second quarter of fiscal 2022, 2.7 percent in third quarter of fiscal 2022, 2 percent in fourth quarter of fiscal 2022, 2.5 percent in first quarter of fiscal 2023 and 2.5 percent in first quarter of fiscal 2023.

Before Nick Read became the CEO, Vodafone’s revenue growth under then CEO Vittorio Colao, was 2.2 percent in first quarter of fiscal 2017-18, 1.3 percent in second quarter of 2017-18, 1.1 percent in third quarter of fiscal 2017-18, 1.4 percent in fourth quarter of fiscal 2017-18, 0.3 percent in first quarter of fiscal 2018-19.

Vodafone, one of the biggest mobile operators in the world, has been selling assets to focus on Europe and Africa.

Nick Read pinned his hopes on the consolidation of Europe’s fragmented telecoms markets but he struggled to turn intention into action. With the economic outlook darkening, the window for deals may be closing, analysts said.

Vodafone was outmanoeuvred in Spain when Orange and MasMovil agreed to merge in July, while there has been no answer to its Italian problem since it rejected an offer for its business there from Iliad and Apax Partners in February.

Nick Read did extract value from Vodafone’s mobile towers by spinning them out and selling a chunk of the listed company to private equity firms Global Infrastructure Partners and KKR.

Vodafone is also in talks to merge with Hutchison’s Three in Britain, but it will be a race to get the deal over the line before Nick Read leaves.

The towers deal and the UK talks were not enough to placate shareholders, however, who are focused on Vodafone’s ability to navigate tougher economic conditions.

Vodafone’s shares have fallen 45 percent since Read took over in October 2018.

“I agreed with the board that is the right moment to hand over to a new leader who can build on Vodafone’s strengths and capture the significant opportunities ahead,” Nick Read said.

“The next question is what solutions are really available to the next CEO?” Jefferies analysts wrote.

Vodafone faces intractable headwinds, they said, adding that dividend policy should be treated as under review.

Della Valle, who will receive the same base salary as Read, would be considered if she put her name forward, analysts said.

Nick Read will continue to receive his base pay of just over a million pounds until end-March 2023, and an amount in lieu of his salary for the remainder of his 12 month notice period.

Nick Read will step down as Vodafone CEO by the end of the year, ending a four-year tenure, Reuters news report said.

Vodafone’s board was unhappy with Read’s lack of progress in delivering growth and has tasked his interim replacement, finance director Margherita Della Valle, with accelerating the execution of the company’s strategy to improve operational performance and deliver shareholder value.

The UK-based telecom operator warned on profit last month as energy costs soared, an already poor performance in its biggest market Germany worsened, and intense competition in Spain and Italy showed no sign of easing.