FT article23 Apr 2022 19:01
Investors in Vodafone are urging the FTSE 100 telecoms group to speed up long-awaited deal making to improve its stuttering performance.
Chief executive Nick Read has been under increased pressure since it emerged in January that Europe’s biggest activist investor, Cevian Capital, had taken a stake in the company and is angling for a major overhaul of the group, including shedding poor performing businesses, consolidating in key markets and beefing up telecoms expertise on the board.
The past decade has been tough for European telecoms, with fierce competition and tight regulation weighing on earnings. Although Vodafone’s share price has rallied since the start of the year, the company has shed more than a third of its value over the past five years.
For several months Vodafone has told investors that it would pursue deals with rival groups in markets where there is significant competition, such as Spain, Italy and the UK — but so far it has been unable to pull any of these off.
“Vodafone’s failure to do a deal has been a problem,” said Peter Schoenfeld, founder of New York-based hedge fund PSAM, one of the company’s shareholders. “It’s not like they’re not focused on the right areas and trying to pursue opportunities. It’s that they’re executing poorly.”
In February, Vodafone rejected an €11bn bid for its Italian business from French rival Iliad, owned by Xavier Niel, saying it was “not in the best interests of shareholders”. Then, after months of negotiations with Spain’s challenger telecoms group over a potential sale of its Spanish business, MasMovil turned its back on Vodafone in favour of a merger with Orange’s Spanish business.
Schoenfeld added that it was “particularly worrying that Vodafone senior management has made no public comments or engagement in recent weeks — not even a statement on a missed opportunity in Spain”.
One top 20 investor said: “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.”
Another top 20 shareholder said that over the past nine months Read, a company veteran who became CEO in 2018, had “come quite a long way, matured and grown into the role,” but said that some shareholders were “unconvinced on whether he has the true leadership qualities to be the best chief executive for Vodafone”.
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