Company insiders joke that Margherita della Valle's “Vodafone blood is red.” Such is the 58-year-old's passion for the company where she has spent just over half her life.
But now the group's Italian CEO must do some of the bloodletting herself. It plans to sell Vodafone Italia as part of a comprehensive restructuring to streamline the company's operations that will see 11,000 employees cut. The potential deal to offload its Italian business to Swisscom – announced this week – is like “selling the house I grew up in”, according to a person close to it.
Della Valle, who was appointed CEO last year after three decades rising through the ranks from her initial role as a marketing analyst, is seeking to turn around the telecommunications company. This comes amid recent criticism from investors and analysts of the poor performance and the group's sprawling portfolio. Her priority? Business simplification.
Insiders say she has already taken a very different approach to the last Italian to lead the group, Vittorio Colao, or her predecessor Nick Read. And unlike Reed, she actually appears ready to deliver important deals.
She was known internally as “fair and transparent,” says Silvia Candiani, a corporate vice president of communications and media at Microsoft who worked with Della Valle at the startup Omnitel Pronto Italia, which later became Vodafone Italia. Candiani adds that Della Valle was a “great role model” who showed that it was possible to have a “softer style” while remaining “reliable and decisive.”
Della Valle was born in Rome, and graduated from Bocconi University in Milan with a master's degree in economics. She is married with two sons and now lives in London, where she has spoken of enjoying walks along the River Thames in her spare time.
Della Valle is described as direct, but also interested in other people's point of view, by many people who have worked with her. Under her leadership, people at the company “feel like they can have an impact,” says one employee.
Vodafone provides mobile and fixed services to more than 300 million customers in 17 countries across Europe and Africa. But the state of the group today is a far cry from its heyday at the turn of the century when it struck a huge deal to acquire the German company Mannesmann for £113 billion. Now, Vodafone is set to exit European markets that were once core to its business. The downgrade begs the question of what's next for the company.
In addition to downsizing the company, Della Valle is seeking to accelerate growth and improve customer service. Industry rivals acknowledge its transformation efforts and M&A credentials, but say it will have to prove those changes work and that Vodafone can grow in the markets where it remains.
“For me, they are still very slow, a huge, lumbering international group, and they don't feel particularly agile,” says one employee at a competitor.
If the Italian deal goes ahead, Della Valle will have completed three of the structural changes it was seeking in markets that have not achieved a return on its cost of capital. In June, Vodafone announced a proposed merger with CK Hutchison's Three, which is expected to create Britain's largest mobile operator. In October, it announced the sale of its Spanish business.
Despite this, shares of the UK-based telecommunications group have fallen by about 30 percent in the past year. “Vodafone had to go through a downsizing process to establish itself,” admits one long-time employee, as Della Valle’s moves to streamline the business take hold.
The focus has shifted to the operational side of the company, as it faces a range of challenges. These include regulatory changes in Germany, Vodafone's largest market, where the company returned to growth last year. “The jury is still out on whether that can change,” says Karen Egan, head of communications at analyst firm Enders. Analysts also expect Vodafone to be forced to cut its dividend, which may raise concern among investors.
Della Valle is making interior changes as well. Notably, it has moved to eliminate a “culture of machismo” in what was seen as an old boys’ club, according to one employee, who says Vodafone has become a more fun environment to work in. Another source says the company has become more inclusive under her leadership.
Della Valle is also not the only woman who has revolutionized the traditionally male-dominated industry. Last month, she was joined in the FTSE 100 by Alison Kirkby, the new chief executive of BT, while Christel Heydemann heads Orange, which recently received approval from Brussels for its joint venture with Mamovil in Spain. Della Valle is hoping to follow suit – with the UK competition regulator currently investigating its planned partnership with Three UK.
In a keynote speech this week at a global telecommunications conference in Barcelona, alongside the CEOs of Spain's Telefónica and Germany's Deutsche Telekom, Della Valle and Heidemann called on regulators to allow operators in the struggling sector to expand through mergers. Della Valle said it's “not economical” to have four different 5G networks everywhere.
The Vodafone chief combines a bold vision with the ability to execute quickly, says Julie Sweet, CEO of consulting firm Accenture, who was also at the event. “She has a sense of humor, doesn't take herself too seriously, and builds trusting relationships,” Sweet says.
The two are linked by the experience of “leading great companies through change,” Sweet adds. Last year, they announced a strategic partnership to accelerate the commercialization of Vodafone's shared services operations, which Della Valle established in 2011, and in which Accenture will invest.
The rapid succession of moves Della Valle has made since becoming president has not gone unnoticed. A senior banker who knows the company well says that despite her long service there, she “brings impressive objectivity” to her new role. “It's going to look a little different than it did when I started.”
yasemin.cm@ft.com
