Vodafone boss Nick Read ousted as shares slump to 20 year low

Vodafone’s chief executive has been ousted following a turbulent year that saw shares tumble to a 20-year low.

Nick Read, who has led the FTSE 100 telecoms group since October 2018, will step down at the end of this month.

The 58-year-old will be replaced on an interim basis by chief financial officer Margherita Della Valle while Vodafone seeks a permanent replacement.

He will remain at the group as an adviser until the end of March.

His fate was sealed at a board meeting on Sunday night as investors grew increasingly frustrated over a slump in the share price to below 100p. The stock has fallen 45 per cent since he took charge.

‘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 yesterday.

But one of the company’s major shareholders, billionaire Xavier Niel, said a change in chief executive would not be enough to revive the business.

Niel, who founded French operator Iliad and owns 2.5 per cent of Vodafone, said a new boss ‘only makes sense if the new chief executive has a clear roadmap from the board,’ including streamlining the business and selling infrastructure to reduce debt and boost profit margins.

Niel added that he was prepared to help the company draw up plans to achieve these goals, according to the Daily Telegraph.

Read will continue to receive his salary and benefits until March 31 and will receive additional sums instead of a paycheck until December 5 next year when his notice period ends. In 2021, he was paid a base salary of just over £1million. 

Read will remain eligible for an annual bonus and share awards, so he could walk away with a sum higher than the £4.2million total he raked in this year.

The firm has also agreed to pay the chief executive £7,000 towards legal fees and another £50,000 for Read to hire a headhunter to find a new role. 

Shares inched up following news of Read’s departure but ended the day down 0.1 per cent, or 0.12p, to 91.02p.

His exit follows a difficult year for Vodafone. Read has been under pressure to streamline the company through asset sales at the same time as boosting performance and the share price. 

But Vodafone last month cut its full-year forecasts following a weak performance in its key German market. 

Another bad omen was when Cevian Capital, an activist investor agitating for change at the group, slashed its stake in October in an apparent admission it had given up.

Other issues connected to Read’s ousting were concerns about the complexity of Vodafone’s recent deal to sell part of its stake in phone mast business Vantage Towers, which has 83,000 sites in ten countries across Europe including the UK, to create a joint venture with New York-based investors Global Infrastructure Partners (GIP) and private equity group KKR.

‘With the shares languishing at their lowest levels in more than 20 years, it is hard to describe Read’s tenure as anything other than a disappointment,’ said AJ Bell investment director Russ Mould.

He added that while Read faced ‘exceptional challenges’ – including the Covid-19 pandemic and soaring inflation – he struggled to persuade the market and his employers that he had a strategy to revive Vodafone’s fortunes.

Berenberg analyst Carl Murdock-Smith said while Read’s departure was ‘not completely out of the blue’, the news was still surprising as it was predicted the Vantage Towers deal and talks about a merger with rival UK mobile network Three would have helped to ease pressure on the embattled chief executive.

But the news was likely to be positive for the shares as investors hoped Read’s permanent successor would be ‘more forthright in driving structural change’.

Market chatter will now turn to who could succeed Read at the top of the telecoms giant. Those thought to be in the running have existing connections to the firm, including Stephen Carter, boss of exhibitions organiser Informa, who sits on Vodafone’s board as a non-executive director. Another is Nick Jeffery, former head of Vodafone’s UK business, who is boss of US telecoms group Frontier Communications.