Vodafone CEO Nick Read to step down
By Frank Prenesti
Date: Monday 05 Dec 2022
(Sharecast News) - Vodafone said chief executive Nick Read would step down at the end December after a year in which the telecoms group as seen its share price plummet and activist investors attack its growth strategy.
Chief financial officer Margherita Della Valle has been appointed interim CEO and "will accelerate the execution of the company's strategy to improve operational performance and deliver shareholder value", the company said on Monday.
Read will remain with the telecoms giant until March 31, 2023.
Vodafone last month lowered its outlook for the full year as profits fell in the first half, driven by a weak performance in its largest market Germany.
Under Read's leadership Vodafone sold its Hungarian business for $1.8bn and demerged its masts business, Vantage Towers, subsequently selling a 50% stake for billions.
The company is currently in talks with CK Hutchison, owner of rival telecoms group Three, to combine their UK businesses which would create the biggest mobile operator in the country.
Analysts at Jefferies said Vodafone faces "intractable headwinds with Germany punching below its weight, cost-of-living crisis weakening support for market repair and the most readily deliverable transaction (Vantage Towers) already announced".
"Balance sheet leverage will remain uncomfortably high post VTWR stake sale, and European service revenues turned ex-growth last quarter. We advocated higher investment in Germany in our downgrade last May. We think dividend policy should be treated as under review," the added.
Russ Mould, investment director at AJ Bell, said that with the shares languishing at their lowest levels in more than 20 years "it is hard to describe Nick Read's tenure as anything other than a disappointment".
"Read has faced some exceptional challenges in that time, notably an inflation crisis and a global pandemic, however he has struggled to persuade the market and, ultimately his employers, that he has a strategic plan to help revive Vodafone's growth."
"It was a damning indictment back in October that activist investor Cevian Capital had apparently begun to give up on hopes of Vodafone ever turning it around as it slashed its stake in the company. Read's final set of results last month did him absolutely no favours, as Vodafone downgraded full-year guidance. Perhaps more worrying was that the response to the pressures the company was facing was simply to cut more costs."
"What a change at the top means for a potential tie-up with rival network Three remains to be seen, presumably the incoming boss will have his own ideas about how to charge up growth at Vodafone. Chatter about a takeover of TalkTalk to bolster its UK broadband offer may gather pace."
Reporting by Frank Prenesti for Sharecast.com
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