Vodafone’s Nick Read steps down after lacklustre company performance

Nick Read

Telco giant Vodafone has announced that Nick Read has will step down as group chief executive and as a director of the Vodafone board on 31 December 2022.

Initial reaction from the media and analysts suggests that Read’s inability to unlock shareholder value from the business has ultimately proven to be his downfall. Since he took over in October 2018, the company’s share price has declined by 45%. In the last six months alone, the company’s share price has dropped around 27%.

The departure of Read comes despite a 2% increase in revenues for the first half of financial year 2023. At the time, Read called that “a resilient performance” but his guidance for the full year was at the lower end of expectations. With key Vodafone market Germany delivering a weak performance, markets reacted impatiently.

In his defence, Read has had to battle with Covid-19, sector disruption and economic headwinds. But activist investors having been pushing Read to shake up the company for some time. With the company’s large long term debt acting as a drag on the business, there have been various rumours regarding mergers and asset sales. To date, however, the only real developments have been talks about a UK merger with Three and the partial sale of Vantage Towers to a private equity consortium.

Market analyst Jeffries responded to the news by saying Read’s departure “suggests that the board appreciates the scale of the challenges it faces, and is now intent on injecting some urgency into the recovery of shareholder value. However, the next question is what solutions are really available to the next CEO?”

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 stake sale) announced. Balance sheet leverage will remain uncomfortably high post Vantage stake sale, and European service revenues turned ex-growth last quarter. We advocated higher investment in Germany last May. We think dividend policy should be treated as under review.”

Read will be available as an adviser to the Board until 31 March 2023, and Margherita Della Valle has been appointed interim group chief executive. Vodafone said: “She will accelerate the execution of the company’s strategy to improve operational performance and deliver shareholder value. In addition, (she) will also continue as group chief financial officer. The Board has initiated a process to find a new CEO.”

Jean-François van Boxmeer, chairman of Vodafone, said: “On behalf of the Board, I would like to thank Nick for his commitment and significant contribution to Vodafone throughout his career spanning more than two decades with the company. During his four years as CEO, he led Vodafone through the pandemic, ensuring customers remained connected with their families and businesses. He has focused Vodafone in Europe and Africa as a converged connectivity provider and led the industry in Europe in unlocking value from tower infrastructure. Margherita has been taking a broader role within the company and the Board fully supports her as interim group chief executive.”

Read said: “It has been a privilege to spend over 20 years of my career at Vodafone and I am proud of what we have delivered for customers and society across Europe and Africa. 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 opportunities ahead.”