Vodafone's Boss Gave Us Years of Static

(Bloomberg) -- Vittorio Colao’s 10 years as boss of Vodafone Group Plc. can be split into two acts: pre- and post-Verizon Communications Inc.

In the five years before announcing the divestment of its 45 percent stake in the U.S. carrier in 2013, Colao almost doubled shareholder returns, outperforming the U.K. market and continental peers Orange SA and Deutsche Telekom AG.

The years since have been a different story — Vodafone has underperformed all three.

That doesn’t account for the Verizon stock that Vodafone shareholders received as part of the divestment. But it does demonstrate how the company has performed under Colao: not as well as it might have done, by a long way. One is inclined to ask how returns might have been if they were purely about Colao’s operational savvy.

That’s not to say that getting out of Verizon was the wrong move. The U.S. company has subsequently outperformed Vodafone, but only in the past three years, and investors in the British carrier received Verizon stock as part of the deal, on top of a special dividend.

But Vodafone without Verizon has disappointed compared to its European peers. It has completed 15 acquisitions totaling 23.5 billion pounds ($32 billion), according to Bloomberg data, but revenue and Ebitda have been stagnant as it exited growth markets. There are caveats: one could argue that Deutsche Telekom AG might have experienced little growth too without its U.S. unit. Meanwhile, British rival BT Group Plc has endured a far more torrid spell, though it suffers more from regulatory burdens.

Having agreed an 18.4 billion-euro ($22 billion) deal to acquire German and eastern European assets from John Malone’s Liberty Global Plc., and the demerger of Vodafone’s Indian business, this may be an opportune moment to depart. The company appears to be betting on consolidating mature European territories rather than chasing emerging markets growth. In a call with investors after the Liberty deal was announced last week, Colao largely let his successor Nick Read have the conch. The message was this was very much Read’s deal.

After a decade where Colao’s main successes were in reaping rewards from financial investments, giving someone else the operational responsibility for the Liberty deal’s success seems a wise move. 

Elaine He assisted with the graphic.

©2018 Bloomberg L.P.

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