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The deal in Italy is the "third and final step" in the reshaping of Vodafone's European operations
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Vodafone's reorganization includes some management changes in Germany and the UK
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Vodafone Group CEO Margherita Della Valle achieved key elements of a "new strategic roadmap to transform Vodafone"
Vodafone Group is entering a new era in April with a new organizational structure for its European operations and significant management changes affecting two of its key markets, Germany and the United Kingdom.
The group announced the changes after it finally agreed to the sale of Vodafone Italy to Swisscom, which in turn plans to merge the business with Fastweb, its own unit in Italy. Subject to approval by the Italian Competition Authority, the €8 billion (US$8.7 billion) deal is expected to complete in the first quarter of 2025 on a debt and cash free basis, according to Swisscom.
The deal in Italy had been much anticipated and is the last of three transactions planned by Vodafone to offload or reorganize its underperforming operations in Italy, Spain and the U.K.
It has already agreed to sell Vodafone Spain to Zegona Communications and expects to complete the transaction in the first half of 2024. Meanwhile, the proposal to merge Vodafone UK with Three UK is currently being scrutinized by the UK’s Competition and Markets Authority. The deadline for the phase one investigation is March 22.
As remarked by Vodafone Group CEO Margherita Della Valle during an investor update last week: “We are changing the shape of Vodafone.”
The deal in Italy is the “third and final step in the reshaping of our European operations,” Della Valle stated. “Vodafone will now focus its operations in Europe on growing markets, where we hold strong positions with good local scale.”
New structure
As of April 1, 2024, Vodafone will reorganize itself into five business divisions: Germany; European Markets (including Albania, Czech Republic, Greece, Ireland, Portugal, Romania, Turkey and the UK); Africa (with Vodacom); Vodafone Business; and Vodafone Investments.
The reorganization will bring some management changes, with Vodafone Germany CEO Philippe Rogge exiting the group effective March 31. He will be succeeded by Vodafone Germany’s current head of consumer business, Marcel de Groot.
According to Della Valle, Rogge and team have “done a good job to bring Germany back to growth and establish all the building blocks for the turnaround. But in this new, simpler structure, we are moving to a different setup.”
She added that de Groot and his team “are really going to be the best placed to drive Germany into the next phase, which for me is really all about relentless execution and strong commercial focus. We have good momentum in Germany,” and expect to see an “acceleration of our underlying growth” in this market.
Meanwhile, Vodafone UK CEO Ahmed Essam is taking on the role of CEO of European Markets and will also be executive chairman at Vodafone Germany. Max Taylor, currently chief commercial officer at Vodafone UK, will move up to become CEO of the U.K. operator.
Kester Mann, an analyst at CCS Insight, remarked that Taylor is set to take on one of the biggest roles in the U.K. telecoms market as Vodafone seeks regulatory clearance for its merger with Three.
“Should the deal be approved, Taylor will head up the U.K.’s largest mobile provider with a combined 28 million customers – a position of huge influence,” Mann said. “If he is to eventually lead a combined Vodafone and Three, he will need to lean on all his experience to bring the two brands together, develop new commercial propositions and bring fresh competition to BT.”
Elsewhere, Serpil Timuray, currently CEO of Europe Cluster, has been appointed CEO of Vodafone Investments and will be responsible for Vantage Towers, Vodafone Ziggo, Vodafone Idea and TPG Telecom.
Della Valle noted that Vodafone Investments will have two key roles in the future. “The first is to manage the non-controlled assets of Vodafone” such as the various joint ventures mentioned above, and separate them from controlled assets such as Vodafone Germany. In addition, Vodafone Investments will oversee so-called partner markets, or the group’s global federation of telco allies.
Della Valle said more details about the future structure and growth plans will be provided on May 14, when Vodafone publishes its results for the 12 months to March 31.
For now, she is at least able to look back on a year when she achieved key elements of a “new strategic roadmap to transform Vodafone,” primarily through “rightsizing” the group’s portfolio.
“We can focus our time, effort and resources in growing markets where we can win and create value,” Della Valle said.
“We are also stepping up our B2B focus,” Della Valle added. “The B2B opportunity for us is both large and growing. Over the last few quarters, we have been increasing our market share gain, with B2B service revenue growth of 5% in the last quarter, and digital services growing well over 20%. To further accelerate, I’m prioritizing dedicated investments and strategic partnerships, such as recently announced with Microsoft, strengthening our range of platforms and capabilities.”