Vodafone CEO Nick Read Ousted After Commercial Challenges

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(Bloomberg) — Vodafone Group Plc Chief Executive Officer Nick Read will step down at the end of 2022, after he failed to halt a years-long slide in the telecommunication giant’s share price and mergers with major rivals failed to materialize.  

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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’d 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, the company said in a statement on Monday. 

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“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,” Read, 58, said in the statement.

Vodafone’s share price has sunk 44% since Read took over in October 2018. In that time the Newbury, England-based mobile and broadband giant has retrenched 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 AG to a private equity consortium in a deal that valued the business €16.2 billion ($16.3 billion) last month. 

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Still, Read struggled to finalize 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 Ltd., are public but have yet to conclude. 

Vodafone shares rose 1.9% to 92.90 pence in London trading at 8:20 a.m. The stock remains close to 25-year lows. 

Vodafone’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 Europe’s largest activist fund Cevian Capital AB, which sold much of its stake earlier this year. More recently, a vehicle backed by French billionaire Xavier Niel bought 2.5% of Vodafone saying it saw opportunities to accelerate deals and improve profits. 

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Vodafone has never appointed an external CEO, so Read’s possible successor may already have some link with the company given its complexity, Berenberg analyst Carl Murdock-Smith said in a note following the announcement. He pointed to Informa Plc CEO Stephen Carter, who serves on Vodafone’s board and was previously head of UK telecom regulator Ofcom, and Nick Jeffery, who was previously Vodafone’s UK head and left the company last year to run US-based Frontier Communications. 

Commercial challenges also await Read’s replacement. 

“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 already announced,” said Jefferies analyst Jerry Dellis in a note to clients. He added that leverage remains “uncomfortably high” after the Vantage deal and that the dividend policy should be treated as under review.

(Updates with market reaction in sixth paragraph)