Vittorio Colao, who has been Vodafone's CEO since July, has announced a change in strategy to focus more on two key goals: cash flow generation, and operational execution. The opposite of these two is: using up cash, and failure to deliver on operational promise. In the last decade, Vodafone has been on a sometimes cash-hungry acquisition and expansion path, whilst sometimes failing to deliver on the original promise of those acquisitions, particularly in saturated parts of the European market.
The old strategy seemed appropriate in an expanding global market where market share and global presence matters. However, it always needs to be balanced against the availability of cash in the financial markets to fund that expansion. And it is here that Colao's change in strategy has its root. Global investors have stopped buying the future, and want to see performance and cash results now.
