Vodafone Chief Executive Stands Down

Shares rise as Nick Read announces his departure

Alliance News 5 December, 2022 | 10:19AM
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Vodafone (VOD) chief executive Nick Read will step down at the end of December, after 21 years at the telecommunications firm and after just over four years as CEO.

Vodafone shares rose 2.1% to 93.09 pence each on Monday morning in London, following the announcement. The stock is down 18% in the past 12 months and down 70% during Read's time in charge.

Read will be available as an adviser to the board until the end of March 2023, when the current financial year ends, the Berkshire, England-based telecommunications company said.

Chief financial officer Margherita Della Valle will step up as an interim CEO, in addition to continuing her role as CFO. The board has begun a process to find a replacement CEO.

According to Morningstar analysts, Vodafone shares are undervalued, with a fair value of 125p. Analyst Javier Correonero says that Vodafone faces a number of challenges in Europe. 

"Headwinds are mainly coming from Germany and Italy. In Germany, Vodafone has underperformed during the past six months. This is a company-specific problem rather than an overall market deterioration, as Deutsche Telekom and Telefonica O2D reported healthy results a few weeks ago, with organic service revenue growth of 2.7% and 3.7%, respectively.

"The company attributed the weaker results in Germany to commercial underperformance and some revenue pressures. The Italian business also performed weakly, with EBITDA after leases, or EBITDAaL, declining 6.6% organically in the first half of the year.

"Management intends to mitigate this weakness with price increases in most of its markets. While we have faith Vodafone can increase prices without losing market share in countries like the Netherlands, Greece, or the UK, we are less confident it can do it in Spain, Portugal, or Italy. These geographies remain very challenging, with lots of competition in the low end of the market."

In its most recent earnings results released last month, Vodafone reported half-year pretax profit of €1.73 billion for the six months to September 30, up 35% from €1.28 billion a year before. Revenue rose 2.0% to €22.93 billion from €22.49 billion.

However, the company back in November lowered its full-year outlook for financial year 2023 for adjusted earnings before interest, tax, depreciation, and amortisation and special losses to between €15.0 billion and €15.2 billion. Previously, it had guided between €15.0 billion and €15.5 billion. For financial 2022, adjusted Ebitda amounted to €15.2 billion.

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