Vodafone shares plunged over 4% despite the company announcing consensus-beating FY 2017 results (Adj. EBITDA +12% YoY organic, beating 10% guidance). With positive results across the board, one would expect markets to react by buying the shares, and yet investors are clearly taking a dimmer view about the company’s prospects with the CEO of 10 years on his way out.

After all, medium-term financial results are only part of corporate success, with vision and strategy providing an equally (some say more) important other side of the coin. With CFO Nick Read (4 years in the position) slated to replace Vittorio Colao at the helm, investors looked to be erring on the side of caution about the group’s direction under new leadership.

While the succession news may have caught the markets off-guard, it appears to be an orderly change within the group (CFO and deputy promoted one rung). Thus, Reed as the numbers man will have been well involved with Vodafone’s recent European spending spree. Colao has in past sought to exit many of Vodafone’s non-core markets (e.g. India, US), but investors look sceptical about whether his replacements can steward the massive acquisition programme in Central and Eastern Europe to drive future revenue growth not just in the medium-term, but for the longer haul.

After 10 years of stability under Colao, Vodafone is potentially setting sail into uncharted waters under the guidance of an executive that has been with the company only 4 years and has less top level experience than the markets would have been fully comfortable with.

Artjom Hatsaturjants, Research Analyst at Accendo Markets