Vodafone embarks on secret overhaul codenamed Project Galaxy as it faces mounting pressure from powerful activist investor
Telecoms giant Vodafone has embarked on a secret overhaul codenamed Project Galaxy as it faces mounting pressure from a powerful activist investor, The Mail on Sunday can reveal.
The FTSE 100-listed company is reorganising its global enterprise division, which serves large corporate customers, as part of a sweeping overhaul of its operations in the UK and continental Europe.
Separately, bosses have discovered the company overestimated money coming in from some multinational clients at the division. Last night Vodafone blamed the accounting glitch on the pandemic.
In touch: Vodafone is reorganising its global enterprise division, which serves large corporate customers
The overhaul is part of plans by Vodafone chief executive Nick Read to simplify the way the company is run and give overseas divisions more independence. Analysts say the measures could make it easier to sell off parts of the group.
The division is an important part of Vodafone’s business, providing telecoms and IT services to some of the world’s top firms, including investment bank Morgan Stanley and insurer Aviva. It is understood to have about 900 contracts.
The division, which serves countries worldwide, has historically made more than £1billion a year in revenues, but these are understood to have decreased in recent years.
Vodafone, which has recently attracted the attention of Europe’s biggest activist investor, Cevian Capital, currently deals with its international customers from hubs in the UK and EU.
In future, it intends to handle contracts with big overseas clients locally, in their home countries. Vodafone said this would enable it to provide more ‘responsive’ support. It is understood the restructuring has resulted in nearly 100 staff departures and job losses.
The division is also at the centre of an accounting error that could run to millions of pounds involving billing estimates for a small number of clients that were higher than the amounts eventually received. Vodafone said the bills were overestimated because it had not factored in the drop in business travel during lockdown, which resulted in lower roaming charges.
It said that the sums involved were not material to its overall accounts and that the mistake had been rectified for its half-year results to September 2021.
Cevian was last week revealed to have taken a stake in the £37billion company. Its arrival heaped further pressure on Read, who has seen shares slide to £1.35 from £1.60 when he took charge in 2018.