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Vittorio Coalo Quits - How Did Vodafone Do? - The Communications Blog - Birchills Telecom

Vittorio Coalo Quits - How Did Vodafone Do? - The Communications Blog - Birchills Telecom

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Vittorio Coalo Quits - How Did Vodafone Do?

Birchills Telecom
Published by in News ·

Vittorio Colao will step down as Vodafone chief executive in October after a decade in chargge. He became CEO in 2008. Vodafone has operated as a corporate deal maker across global markets during his tenure.

How Big Are Vodafone?
Vodafone operates globally ranking second behind China Mobile in the number of mobile customers with over 500 million customers.
Vodafone owns and operates networks in 25 countries, and has partner networks in 47 further countries. Its Vodafone Global Enterprise division provides telecommunications and IT services to corporate clients in 150 countries.

It employs over 110,000 people globally, with a turnover of £45bn. Assets exceed £150bn. The market capitalisation is about £45bn – that is greatly below the break up value- the enterprise value of about £85bn.

Last Deal
The last and biggest deal from Vittorio is the €18bn takeover of Liberty Global’s German and Eastern European cable companies. Vodafone has paid the equivalent of 11.5 times the operating cash flow of the Liberty assets, in line with recent smaller deals in European cable, and 12 times that figure for the German cable unit Unitymedia
Mike Fries, chief executive of Liberty Global, said the deal to sell its cable networks to Vodafone would create a stronger competitor to Deutsche Telekom. “Germany is screaming for a challenger which it doesn’t have today,” he said.

Last Deal Pending
Vittorio’s deal merging Vodafone’s struggling Indian business with Idea Cellular is still moving forward. Idea, a part of the Aditya Birla conglomerate, and Vodafone signed a merger agreement last year, creating the country’s biggest telecom operator. The merger follows a broader trend by India’s network operators who are rushing to consolidate amidst a year-long price war sparked by the entry of Reliance Jio.

Vodafone had fought a long battle regarding taxes to be paid on the earlier purchase of assets from Hutchinson Whampoa in India. They eventually won in the courts in 2013 so the Indian Government changed the law retrospectively in 2016. It is not clear if the £1.4bn demanded was ever paid.

2012 Buys Cable and Wireless Worldwide
Another major deal from Vittorio was the 2012 deal when Vodafone bought Cable & Wireless Worldwide (CWW) for £1.04 billion. The acquisition gave Vodafone access to CWW's fibre network for businesses, enabling it to take unified communications solutions to large enterprises in the UK and globally; and expand its enterprise service offerings in emerging markets.

2013 Sells Verizon Stake
Widely regarded as being Mr Coalo’s finest moment, in 2013 Vodafone sold its 45% stake in Verizon Wireless to Verizon Communications for billion, in one of the biggest deals in corporate history.

With the proceeds from the deal Vodafone announced a £19 billion Project Spring initiative to improve network quality in Europe and emerging markets like India. They also returned $16.6bn  cash and shares to existing shareholders.

Other Deals
Vodafone has completed many, many  other deals and transactions in the various countries in which it operates.

Overall Performance
Vittorio Colao has been a solid pair of hands. The group seems to lack strategic vision under his leadership ,preferring instead pragmatic financial arrangements in the markets in which it operates. The business is regarded as competing in a series of markets with no coherent vision of a compelling USP.

How Have The Shareholders Done Over The Decade?
The share price bottomed at 110p in November 2008 and is now 178p. It peaked in 2015 at 243p. The share price has drifted down some 23% this year. However, there have been significant share distributions and dividends along the way.  Most notable was the £16.6 billion special dividend that Vodafone paid from the sale of its stake in Verizon Wireless of the US back to shareholders.
However, the business does not seem to make friends easily and in pursuit of more financial deals seems to underperform.

So What Now?
More of the same basically.

Nick Read, chief financial officer, has been promoted to the top job having been groomed as the preferred internal candidate. He joined Vodafone in 2001 and, before becoming CFO in 2014, led the UK business and was responsible for Africa, Asia and the Middle East.

Incoming chief executive Nick Read joined Vodafone in 2001 Mr Read, 53, who has spent 12 years working alongside Mr Colao, said his job would be to get the most out of the “embedded champions” within Vodafone and to deliver “efficiencies and greater returns” by integrating Liberty and Idea.
Gerard Kleisterlee, chairman of Vodafone, said Mr Colao’s tenure had been “outstanding”. “He has been an exemplary leader and strategic visionary who has overseen a dramatic transformation of Vodafone into a global pacesetter in converged communications, ready for the Gigabit future,” he said.

I think it is fair to say that shareholders and other stake holders may not take such a complimentary view.

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