Not so poor Vodafone still can’t have it all its own way

Not so poor Vodafone still can’t have it all its own way

If a month is a long time in Hollywood, it can be an eternity in the mobile business. For a case in point, consider the mercurial fortunes of Vodafone’s chief executive Vittorio Colao.

Less than a month ago Colao seemed to have it all. The toast of the industry and the darling of the London stock exchange, the Italian-born businessman was riding high on a wave of euphoria after Vodafone shareholders (not surprisingly) approved a £51bn cash and shares windfall from the sale of Verizon Wireless. The sale was lauded worldwide as the largest single return of value to investors in corporate history. It was also a personal victory for Colao who had been wooed from Italian publishing company RCS MediaGroup in 2008, with a mandate to grow the company and stave off competition from ever hungry rival operators.

With the Verizon deal signed, it seemed that Colao could do no wrong. And then, as the ink on the Verizon contract was still drying, came the sobering news of Vodafone experiencing a fall in third-quarter revenue. The slide was said to have been brought about by lacklustre performance in key markets across Europe. The world’s number two mobile operator revealed its revenue in the three months ended December 31 had slid by 3.6% to £10.98bn from £11.39bn a year earlier.

Undaunted, Colao brushed off concerns about the operator's performance by reaching for his cheque book. During a press call, ostensibly organized to tackle the thorny issue of the revenue decline, Colao expertly shifted the focus by announcing that Vodafone had set aside a staggering £19bn for the largest network investment in the company’s history.

The CEO also hinted that he would not be averse to spending more money on adding other businesses to the Vodafone family. Indeed, he said, Vodafone had the capacity to spend up to £30bn on acquisitions in coming years. And no deal, he added, would be considered too big if it made strategic sense.

And yet, despite Vodafone’s bloated coffers, events were to conspire against the company. Just days after announcing the £19bn investment programme, news broke that Vodafone had been thwarted in its attempts to purchase Spanish cable operator Ono. 

Despite a handsome offer of £5.7bn made to the company's private equity owners, the Ono board had voted to push ahead with a £5.8bn initial public offering instead.

Well placed sources said that any prospective suitor would have to pay up to £8bn to convince Ono's owners to drop their plans for a stock market sale. 

Whether Colao will rise to the bait and up the ante is open to speculation. But whatever he decides, as February draws to a welcome close, the Vodafone CEO will undoubtedly reflect that a month is indeed a very, very long time in the mobile industry.

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