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Vodafone investors running out of patience with CEO Read

UK-based Vodafone’s apparent struggle to strike a multi-billion pound asset sale is reportedly causing consternation among shareholders.

Some have even questioned whether CEO Nick Read (pictured) – who has worked for the telco for more than 20 years – is the right person for the job. This all comes from a Financial Times report on Saturday that cited several significant investors in the telco group, most of whom preferred to share their concerns anonymously.

“We have serious doubts that the company can re-establish credibility with its legacy CEO and his strategy. There have been too many disappointments and missed opportunities,” was the scathing review offered by one such investor, who was referred to as a ‘top 20 shareholder’.

Another shareholder in the top 20 was a little kinder, saying Read has “come quite a long way, matured and grown into the role.” By the same token though, they said shareholders are not convinced he has “the true leadership qualities to be the best chief executive for Vodafone.”

Ouch. It’s particularly harsh given some of the more radical undertakings by Vodafone during Read’s tenure, including hiving off its towers into a separate entity and then floating it, and also putting its money where its mouth is when it comes to new technology like Open RAN.

But for financial investors, the priority will always be earning a return, and that’s where Vodafone has been struggling lately. At the start of the year, minority shareholders led by activist investor Cevian Capital began lobbying Vodafone to hive off underperforming parts of its portfolio and monetise its infrastructure arm Vantage Towers, in an effort to revive the group’s ailing share price.

Read hinted in February’s quarterly results report that Voda was on the lookout for deals, leading to speculation that its embattled operations in Italy and Spain, as well as a big chunk of Vantage Towers, could be put on the block.

Since then, despite seemingly material interest for various assets from multiple credible suitors, Vodafone has yet to do a deal that will assuage this group of shareholders.

France-based Iliad in February made an €11 billion preliminary bid for Vodafone Italy, a bid that Vodafone swiftly rejected. In Spain, despite years of intermittent rumours of a deal between Vodafone and Masmovil, in March it was Orange that announced it had begun exclusive talks to create a 50-50 joint venture with the latter, one with an estimated enterprise value of €19.6 billion.

As for Vantage Towers, last month Reuters reported that investment firms Brookfield and Global Infrastructure Partners made a $16 billion unsolicited offer for a majority stake in the unit. However, the report claimed that Vodafone would prefer to do a deal with a telco rather than financial investors.

“Vodafone’s failure to do a deal has been a problem,” said Peter Schoenfeld, who runs New York-based hedge fund PSAM, and was one of the few Vodafone investors in the FT report to put their name on the record. “It’s not like they’re not focused on the right areas and trying to pursue opportunities. It’s that they’re executing poorly.”

For its part, Vodafone reiterated its position, telling the FT that it is still exploring multiple opportunities in a number of markets, and while it remains open and pragmatic to deals, it’s not about to conduct any fire sales.

That is unlikely to placate some of the less patient investors though, with another unnamed shareholder warning rather ominously that if Read doesn’t do a deal for Vantage Towers soon, “then his days are numbered.”

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