Why he said what he said

Read has retracted his criticism, but he was pointing out the obvious — the current pricing regime is unsustainable

What other top executives in the Indian telecom sector might have said in whispers behind closed doors, Vodafone CEO Nick Read said out loud in public last February, namely that the current pricing regime, caused by the ferocious competition, was unsustainable because everyone was operating below costs.

Read chose a global audience at the Barcelona World Mobile Congress to spell out his criticism of the Indian telecom regulator and how the body’s decisions had, over the past two years, adversely all telcos, barring Reliance Jio.

In fact, he was blunt about the dismal prospects of his Indian business even last October when he took over the reins of Vodafone’s joint venture with Idea Cellular. So it wasn’t a great surprise when in London on Tuesday, Read launched an even sharper attack during a press conference. He said Vodafone Idea was heading into a ‘liquidation scenario’ unless it received financial relief from the Indian government. He pointed out that the UK company has written off the carrying value of its 45 per cent share in the loss-making joint venture and reiterated that it won’t invest anything more in its Indian operations.

Read knows what he is doing. His views are clearly very different from his predecessor, the legendary Vittorio Colao or even from Arun Sarin who brought Vodafone into India. Both believed that Vodafone would eventually reap great benefits from the Indian market and that it was logical to stay invested. Read, under pressure to deliver the goods to shareholders who have been seeing notso-good numbers, has a different view.

Unlike Colao, he has hands-on experience of emerging markets and India. Read was CEO of Africa, West Asia and the Asia Pacific Region and also on the board of its Indian subsidiary, Vodafone Essar.

The British telecom major had entered the Indian market by buying out Hutchison Whampoa’s 67 per cent stake (Vodafone bought out Indian partner Essar in 2011). As the CFO at Vodafone, working closely with Colao, he had been involved in the company’s attempt to take the company public with an IPO in India, which foundered on unfavourable market conditions. His critics say the company missed the bus in its quest for high valuations. But the financial head of the company in 2016 faced an impairment of $6.3 billion in its Indian business primarily to face the onslaught of Reliance Jio. The latter was offering 4G services virtually free, having been given carte blanche by the regulator to do so (which was the gist of his Barcelona statement).

It was Colao who pushed through the idea of a merger with Idea. The plan quickly found traction as both companies realised it was the only way to slow down the Reliance Jio juggernaut. But while Colao used his personal touch and had been pursuing a joint venture with Kumar Mangalam Birla since 2010, it was Read who was flown in to work out the nittygritty of the deal, especially as it was facing various regulatory challenges.

The merger between Vodafone and Idea happened in August 2018. The deal had a financial impact. Read, as the CEO, reported a loss for the first six months of FY19 for the UK company. One key reason for the loss was the £3.4-billion loss incurred from the sale of the Indian operations. Those who know Read say that he worked closely with Colao who transformed Vodafone from the owner of a host of networks across the globe (some with minority equity) into an integrated telecom company dominating Europe.

He launched his career after graduating in finance and accounting from Manchester Metropolitan University. He swiftly rose through the ranks to become the CFO of Federal Express Worldwide for Europe, West Asia and Africa.

In 2001, Read joined Vodafone and here, Arun Sarin gave him the big breaks, making him the chief executive of its UK operations in 2006. The post helped him hone his operational skills, unlike Colao who came from a management consultancy background.

Read expanded his operational knowledge as the regional CEO, overseeing the group’s telecom business in Africa, the West Asia and Asia Pacific and as director in the Indian subsidiary and in Indus Towers (a joint venture with Airtel and Idea). This brought him closer to understanding the hyper-competitive Indian market.

He has since ‘retracted’ the remarks he made on Tuesday, saying the media had misrepresented them and re-affirming his ‘commitment’ to the Indian market.

“The coverage in India has been distorted and I apologise for the impression that the coverage conveys. It doesn’t accurately represent my comments,” he wrote in a letter to the Prime Minister, Telecom Minister Ravi Shankar Prasad and senior government officials.