A leading figure in European telecoms has criticised some of the biggest companies in the sector for being overly complex, too centralised and failing to listen to customers after a tumultuous year in which their value has tumbled.
Dutch businessman Olaf Swantee, who ran EE for five years between 2011 and 2016 and is seen by industry insiders as one of the frontrunners to become chief executive of Vodafone, said: “incumbent telcos have too many layers [and] too much bureaucracy”. He called for this to be loosened to boost performance.
Swantee did not name any group in particular but the sector has had a bruising five years in which some of the leading groups, including BT and Vodafone in the UK, Telefónica in Spain and Orange in France, have had their valuations slashed by up to 65 per cent.
At the start of the year there were hopes that, following years of heavy investment, their fortunes would improve with several companies starting to implement above-inflation price rises and a trickle of market consolidation. But soaring energy prices and inflation have increased their cost of capital and threatened to curtail consumer spending, while dealmaking activity has been lacklustre.
Vodafone has come under particular pressure from activist investor Cevian and several of its biggest shareholders to simplify its sprawling business, shed poorly performing units and decentralise its global operations.
The board ultimately decided earlier this month to part ways with chief executive, Nick Read, who will step down at the end of the year.
Out of the incumbents only Deutsche Telekom has managed to buck the sector trend, in large part because of its thriving business in the US which has bolstered group profits and enabled the company’s share price to rise around 28 per cent over five years.
“Telcos don’t show very quickly that they’re in trouble. It takes a while before they fall apart,” said Swantee, who has also been an executive at Orange but is now an investor in the sector. Financial Times