Vodafone chief executive Nick Read will step down at the end of this month following a turbulent year in which the company’s share price has fallen sharply and management has faced criticism from investors.
Read, who has led the telecoms group since 2018, will be replaced on an interim basis by Margherita Della Valle, Vodafone’s chief financial officer, while it seeks a permanent replacement.
His exit comes less than a month after Vodafone cut its full-year profit forecast, with the group pinning the blame on a weak German market. Germany accounts for about 30 per cent of the group’s revenue.
Read has struggled to convince investors of his ability to improve the group’s performance and increase its share price. The stock has fallen by about a fifth this year compared with a 2 per cent gain in the FTSE 100. Vodafone shares were up 0.7 per cent in early trading on Monday.
Its rival BT’s shares have fallen almost 30 per cent since the start of the year to 131p.
“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 said in a statement.
The company added that Della Valle would continue in her role as CFO while she runs Vodafone in the interim. Read, who has been at the group for more than two decades, will remain as an adviser to the board until the end of March.
Vodafone said Read’s departure was a mutual decision between the board and the chief executive, and that it would initiate a search for his successor among internal and external candidates. The board hopes Read’s replacement will be able to speed up execution of the company’s existing strategy.
Over the past 12 months, Vodafone has faced increasing pressure from activist investors to overhaul its sprawling array of businesses and ditch underperforming units.
Vodafone’s share price has fallen more than 60 per cent over the past five years. Read has struggled to make good on his ambition to pursue significant deals in some of the company’s most challenging markets, including Spain, Italy and the UK.
After lengthy negotiations with MasMovil in Spain about a potential merger, the Spanish challenger opted to do a deal with France’s Orange instead. Talks with CK Hutchison about merging Vodafone’s British business with Three UK have not been finalised, although the company said they remained ongoing.
Read did however successfully strike a series of deals, including a sale of its Hungarian business for $1.8bn, as well as spinning out and then selling up to 50 per cent of its masts business, Vantage Towers, allowing him to free up billions in cash. He also led Vodafone through the pandemic, “ensuring that our customers remained connected with their families and businesses”, said Jean-François van Boxmeer, chair of Vodafone.
Vodafone said that Della Valle would “accelerate the execution of the company’s strategy to improve operational performance and deliver shareholder value”.
However, analysts at Berenberg warned the new chief executive would face a tough task. “One of the reasons why we are surprised by today’s news is that it’s not clear what any new CEO would really do differently to Mr Read, other than risk a ‘fire sale’ of assets,” they wrote, adding that if Della Valle was permanently appointed chief executive she “would be seen as a continuity choice, which is not what we believe investors are looking for”.
Analysts at Jefferies cautioned that Vodafone faced “intractable headwinds”, including “Germany punching below its weight” and uncomfortably high leverage.