French billionaire demands more change at Vodafone after boss is ousted

Vodafone is under pressure from a billionaire French shareholder to accelerate cost-cutting and asset sales after the ousting of its chief executive.

The FTSE 100 telecoms giant announced Nick Read’s exit following a nearly 50pc slump in its share price since he took charge four years ago.

But Xavier Niel, founder of the French operator Iliad and owner of 2.5pc of Vodafone, said that change at the top would not be enough to deliver a turnaround.

Mr Niel, who is also co-owner of newspaper Le Monde, said: “A change of chief executive only makes sense if the new chief executive has a clear roadmap from the board of directors.

“This roadmap should be: streamline Vodafone, sell infrastructure to reduce debt and benefit from high valuations, drive cash generation and improve margins, focus on investment and broadband in Germany.”

He added that he was prepared to help the company draw up proposals on how to achieve these goals.

Mr Read, who has spent two decades at Vodafone, will stand down at the end of the year. Finance chief Margherita Della Valle will be step up to become interim group chief executive while a permanent successor is found.

The abrupt exit was agreed over the weekend and comes amid intense talks with rival Three about a merger of their UK mobile divisions. It comes weeks after Mr Read announced €1bn of cost cuts, including job cuts, and price increases across Europe.

He said: “I agreed with the board that now is the right moment to hand over to a new leader who can build on Vodafone’s strengths and capture the significant opportunities ahead."

The company is expected to look externally for a replacement in competition with Ms Della Valle. Analysts at Berenberg  said the market was seeking new blood, and suggested former UK boss Nick Jeffery and current board member Stephen Carter as potential replacements.

Vodafone, now valued at just £24bn, is sitting on a €45bn (£38bn) debt pile and in November reported a 2.6pc decline in adjusted earnings, confirming its full-year profits would be at the lower end of expectations. Shares have declined halved since Mr Read took charge. One major investor told The Telegraph the market has overlooked the value of Vodafone's sprawling assets.

The business has come under pressure from the Swedish activist fund Cevian, as well as Mr Neil. The telecoms sector faces mounting investor unrest over poor returns. Patrick Drahi, the French billionaire behind Altice, last year acquired an 18pc stake in former state monopoly BT.

Analysts at JP Morgan said investors were often bewildered by the breadth and complexity of Vodafone’s global empire, and wanted to see its debt reduced. They suggested an outright sale of its German towers division or floating its Dutch business could boost its finances.

Mr Read will be entitled to 12 months salary following his departure, including pension contributions, worth roughly £1.2m, plus a further bonus and dividend.

His payout over the coming 12 months could be in the region of £4m, a source said, dependent on financial and share price performance. Included in his exit package is a £7,000 option to cover legal expenses and £50,000 to hire “outplacement support” to prepare for a new role. He will remain on the company’s board until April next year.

The 58-year-old joined Vodafone two decades ago, soon after its $185bn merger with Germany’s Mannesman in what was the largest hostile takeover of all time at the height of the dotcom boom.

As chief executive he was responsible for a series of major deals, including completing the acquisition of Liberty Global’s Germany business and the sale of a stake in its mobile masts arm in a €20bn float in Frankfurt.

But despite the flurry of activity, so far its German acquisitions have struggled to pay off. Germany now accounts for 30pc of Vodafone’s revenues, but profits fell earlier this year and it is losing customers.

The new chief executive will be expected to focus on improving operational performance as well as deal-making. The to-do list includes a UK merger with Three, the mobile network owned by Hong Kong billionaire Li Ka-Shing.

Jerry Dellis, an analyst at Jefferies, said the company’s dividend policy should now be treated as under review. He added the departure of Mr Read indicated that the board is “intent on injecting some urgency into the recovery of shareholder value”.

Jean-François van Boxmeer, chairman of Vodafone, said: “On behalf of the board, I would like to thank Nick for his commitment and significant contribution to Vodafone as Group Chief Executive and throughout his career spanning more than two decades with the company.”

Mr Read said: “It has been a privilege to spend over 20 years of my career at Vodafone and I am proud of what we have delivered for customers and society across Europe and Africa.”