Vodafone Group’s incoming CEO Nick Read (pictured) revealed he is mulling the sale of the company’s mobile tower assets to reduce a debt load of €31 billion, as part of a business shake-up when he takes the helm next month.
In comments made at a Goldman Sachs conference in New York, Read, who will take over from Vittorio Colao in October, said a sale of the company’s tower assets was dependent on striking the right deal.
Vodafone owns 110,000 towers across Europe, 55,000 of which are directly controlled by the operator and are valued at around €12 billion, Financial Times reported citing Barclays Bank estimates. Read reportedly said he was looking at how to balance Vodafone’s network needs against the gains of offloading its towers to a specialist company.
Read has a big job on his hands to improve Vodafone’s performance: aside from a large debt pile, the company’s Q1 2018 results failed to impress, with revenue falling 4.9 per cent largely due to increased competition in Spain and Italy. Its weak performance had a major impact on share price, which has fallen by a fifth over the past year and led to activist investor Elliott Management taking a stake in the operator.
An FT source said Elliott could also push for a sale of Vodafone’s mobile towers, a strategy Colao was reluctant to pursue.
In his comments, FT said Read addressed the operator’s debt pile and the issue of dividend payments resulting from its proposed acquisition of Liberty Global’s cable networks in Czech Republic, Hungary, Romania and Germany, which is still undergoing regulatory scrutiny.
He said improved earnings performance and asset sales would help it reduce debt, while also discussing an €8 billion cost-cutting drive for its service centres. This will see the company cut 1,700 jobs across shared services centres in Egypt, India and Romania this year, around 8 per cent of its entire workforce for that part of the business.
The strategy will also involve overhauling customer service, technology and operations, as back office functions are taken over by “robots”, said Read. Other changes include floating its New Zealand business, which is likely to happen in 2019. The company recently completed major mergers in India and Australia.
Details of Vodafone’s wider strategy under Read will be outlined in November, when it reports its next results.Subscribe to our daily newsletter Back