Vodafone Chief Executive Vittorio Colao will step down in October after 10 years in which the Italian reshaped the world’s second largest mobile operator into a digital communications powerhouse with a string of major deals.
The urbane Colao will be replaced by Nick Read, finance director since 2014 and long seen as his successor due to his previous roles running Vodafone’s operations around the world.
He will take charge of a group that, under Colao, pulled back from its once brazen expansionist drive, most notably when it sold out of the United States with a $130 billion exit from a joint venture with Verizon.
Last week Vodafone struck a long-expected $21.8 billion deal to buy Liberty Global’s cable TV and broadband networks in Germany and Eastern Europe, the latest move to strengthen its European business.
And in India, which it entered with great fanfare in 2007, it is merging its operations with Idea Cellular to bulk up in a market that has been hit by intense competition.
“Today Vodafone is at a natural juncture, the strategic 10-year reshaping of the group is now nearing completion,” Colao, 56, told reporters. “Nick has been the core architect of Vodafone strategy for much of my tenure.”
Analysts said the timing of the departure should come as no surprise and that investors should be reassured by Read’s appointment. The change came as the group published solid 2018 results and a more cautious 2019 outlook.
Shares in Vodafone fell almost 4 percent on the news.
“With the Liberty deal announced and India set to close, he leaves behind a strategically well-positioned portfolio for his successor Nick Read, who we think is a safe pair of hands,” analysts at Bernstein said.
End of an era
In Read, 53, investors will get a new chief executive long groomed for the job.
Read said he had been alongside Colao through the process of reshaping Vodafone, and he would now deliver the benefits for shareholders and customers.
“I think now is the time to really focus on our organic plan, really focusing on digital transformation of our business and the customer experience,” he told reporters.
“And of course there’s a big opportunity of integrating these new businesses, both Liberty and over in India.”
Having joined Vodafone in 2001, Read’s roles have included running the British and emerging market operations. He has also sat on the boards of the company’s listed operations in Africa and Qatar, its subsidiaries in India and Egypt and its joint venture in Australia.
Read will be replaced by his deputy since 2015, Margherita Della Valle. The Italian joined Omnitel Pronto Italia - which later became Vodafone Italy - in 1994.
The announcement came as the company reported a 1.4 percent rise in organic service revenue for its fourth quarter, beating analyst forecasts of a 1.1 percent rise.
Full year core earnings rose 11.8 percent to 14.7 billion euros, beating guidance for “around 10 percent” organic growth and just ahead of analyst forecasts of 14.6 billion euros.
For 2019, the group forecast a more cautious organic adjusted core earnings growth of between 1 and 5 percent, and free cash flow before spectrum costs of at least 5.2 billion euros, slightly down on the 2018 number of 5.4 billion euros.
Work to do
Chairman Gerard Kleisterlee said Colao had been an “exemplary leader and strategic visionary who has overseen a dramatic transformation of Vodafone”.
Born in northern Italy, Colao cut his teeth as a management consultant at McKinsey before he joined Omnitel in 1996.
A keen cyclist, the tall Colao has lived a quiet life in London, largely avoiding London’s corporate social scene.
Colleagues say he enjoys the cut and thrust of talking to journalists and will also happily discuss European politics. Analysts have speculated that he could move into Italian politics.
His departure follows that of Martin Sorrell at WPP after 33 years in charge, meaning the FTSE 100 has lost two of its longest-serving CEOs in a short period of time.
“It has a been a real privilege to lead the group through a decade of massive strategic transformation culminating in today’s good financial performance,” Colao told reporters.
“But it is not yet the time for goodbyes. There is still a lot to do between now and October.”
Updated Date: May 15, 2018 15:51 PM