Sudden resignation of Vodafone Chairman Nick Reed

Sudden resignation of Vodafone Chairman Nick Reed

Posted on Monday, December 5, 2022 at 1:30 pm

Vodafone announced, on Monday, the departure of its managing director, Nick Reid, at the end of this month, after four years at the helm of the British Telecom Group, without giving reasons, but in the context of poor performance.

In a press release, the group specified that Nick Read, 58, is also resigning from the Board of Directors (CA) but will remain as an advisor to the CA through March 31. Then he will leave the company.

He will meanwhile be replaced by Margherita Della Valle, 57, who will also retain her current position as Chief Financial Officer while searching for a permanent director to replace Mr. Reid.

The group reacted little mid-session in London, gaining 0.2% to 91.35 pence in a market showing similarly higher demand.

The stock is down nearly 20% year-to-date and a half since Reid took over in 2018.

“I would like to thank Nick for his commitment and significant contribution to Vodafone as CEO and throughout his career (…) in the company,” welcomed Chairman Jean-François van Boxmeer, quoted in the press release.

“It has been an honor to spend more than 20 years at Vodafone and I am proud of what we have delivered to customers and the community across Europe and Africa,” said the outgoing CEO.

“I agree with the Board of Directors that now is the right time to hand over responsibility to a new leader to build on Vodafone’s strengths and seize future opportunities,” he added.

– ‘Disappointed investors’ –

The telecommunications group saw its profits drop slightly during a troubled first half, which was punished by “counter-trading performance in Germany,” its largest market, and inflation.

It had lowered its earnings forecast in light of prospects of recession in Europe, particularly in the UK.

To mitigate the impact of the economic context, Vodafone had raised its prices and analysts were concerned about customers’ ability to absorb these additional costs.

The group recently said that it hopes to make between 3.2 and 7.1 billion euros by creating a joint venture with US investment funds KKR and GIP, which will buy back part of the shares of its subsidiary of Vantage Towers main terminals.

The telecom company, one of Europe’s heavyweights, is undergoing a multi-year restructuring that has led it to refocus on Europe and Africa, after implementing a savings programme, and listing Vantage Towers on the Frankfurt Stock Exchange.

It announced in October that it was in discussions to merge its UK activities with Three UK, a subsidiary of Hong Kong holding company CK Hutchison, in order to combine its forces in 5G.

“Investors are hoping that a change at the helm of Vodafone will invigorate the company’s shares. While any change in leadership creates turmoil, Nick Read’s restructuring strategy has not yet borne fruit.” Susannah Streeter, analyst at Hargreaves Lansdown, commented.

“Investors were disappointed by weaker-than-expected guidance,” she adds, while “macroeconomic conditions and rising energy costs are challenges to manage in the highly competitive mobile industry, where price hikes will be complicated given the cost-of-living crisis.” .

It concludes, “The pivot in Africa brings good growth opportunities in the long term, but progress in the medium term remains unclear.”

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