Permanent Digital Revolution Faces Vodafone’s New Boss

Nick Read will take over as Vodafone CEO in October.
Nick Read will take over as Vodafone CEO in October. Photo: handout/Reuters
May 15, 2018 11:08 a.m. ET

“Everything needs to change, so everything can stay the same.” Vittorio Colao must be wearily familiar with this maxim from classic Italian novel “The Leopard” after a decade as chief executive of mobile giant Vodafone . VOD 0.53% With 5G on the way, his successor Nick Read may find change just as constant.

When Mr. Colao, a North Italian cycling enthusiast, took the top job in July 2008, he inherited a sprawling empire of mobile-phone assets on five continents. When he hands over to Mr. Read in October—a move unexpectedly announced alongside full-year results Tuesday—Vodafone will own a more focused portfolio of both wired and wireless networks centered on Europe. Mr. Colao has sought a deeper footprint in fewer places.

The strategy made sense as the heavy returns on offer in the early years of mobile-phone adoption faded. But because most European telecom companies have been doing the same thing, it hasn’t been hugely rewarding. Mobile revenues fell for years even as smartphones sent mobile-data usage skyward. Vodafone shareholders who have reinvested dividends have doubled their money in euro terms under Mr. Colao, but the share price is up just 15%.

The company has promoted its current chief financial officer. This is wise, given the $23 billion purchase of mainly German cable assets from John Malone’s Liberty Global announced last week. The healthy premium Vodafone has agreed to pay makes the deal unusually dependent on cost savings, for which Mr. Read can be held responsible. The risk that antitrust regulators don’t like the combination of Germany’s two dominant cable networks could overshadow Vodafone for the next year or so.

Vodafone and its peers are responsible for the plumbing of the digital world, but they haven’t benefited much from its breakneck expansion. That’s one thing that may stay the same.

Write to Stephen Wilmot at [email protected]