opinion


Where do you see yourself in five years?

Arun Sarin is stepping down from the top job at Vodafone five years after taking the helm. It’s been a bumpy ride, but he’s coming out smiling.

When Arun Sarin took over from Chris Gent at Vodafone five years ago there were suggestions that his forthcoming stewardship would be one of consolidation and integration. Gent was the ambitious empire builder, while Sarin would marshal the business into a 21st century marketplace characterised by falling revenues, tightening margins, increased competition and stringent regulations.

The announcement that Sarin would be stepping down came as the world’s biggest operator by revenue reported a profit of £6.7bn for the year to end March 31st, versus a loss of £4.8bn in the previous year. Revenues also jumped 14.1 per cent year on year to £35.5bn, with data revenues up 40.6 per cent on an organic basis to £2.2bn, driven by strong growth in mobile data cards. Vodafone counted 5.8 million wireless broadband users at the end of the financial year.

At a press conference on the morning of the announcement Sarin was typically unassuming. The lion’s share of the presentation was spent detailing the financials outlined above. On the subject of his imminent retirement he said: “I have achieved what I set out to achieve upon becoming CEO five years ago and that is why I think now is the right time for me to retire.”

He has earned the plaudits for a job well done. In April this year he was named by one UK newspaper as the most powerful man in British business. It’s all a far cry from the flack he received following a failed bid to acquire AT&T in 2004, and the posting of a record loss of £14.85bn in 2006 along with the subsequent shareholder revolt where many thought Sarin would be forced to step down.

Commentators who say Sarin is simply getting out while the going’s good are doing the man a disservice. His long-term goals and vision have been met. It’s no accident that he’s leaving the company in better shape than he found it.

The turning point for Sarin, according to IDC analyst John Delaney, was when Vodafone acquired the Indian operator Hutch Essar in early 2007. “Sarin’s reputation was enhanced greatly by both the substance and the style of this acquisition,” says Delaney. “India is the world’s fastest-growing and second largest mobile market. By taking control of an operator there, Vodafone made the most convincing move possible away from the ‘maturity trap’. And the style.well, by bringing a long, complicated and nail-biting saga to a successful end, Sarin turned out to be second to none in the swashbuckling stakes.”

Sarin’s tenure also included successful acquisitions in emerging markets such as Romania and Turkey. Although, according to Jeremy Green, mobile director at Ovum, the exits over which Sarin has presided are almost as interesting as the acquisitions. Vodafone disposed of interests in operators in Belgium, Sweden, Switzerland and Japan.

“It would be neat to suggest that, just as the group tried to catch the waves of growth, it backed out of places where growth is slowing. Neat, but wrong-Vodafone has remained resolutely committed to its mature markets in Europe,” points out Green. “Its withdrawals have been from those operators where it does not have a controlling interest. This suggests that it has a really strong position on how to get the most from mature markets, and that this is mainly about using the scale of the group as a whole to cut both operating and capital expenses. The absence of control means that this model can’t be fully applied-hence the exits.”

Where that leaves Voda’s 45 per cent interests in Verizon-which neither uses the Vodafone brand nor the same network technology-is unclear. But that is not an issue that will keep Sarin up late into the night any longer, if indeed it ever did. The new guy, current deputy chief executive Vittorio Colao, will succeed Sarin and inherit any potential US headaches.

“Armchair pundits have rarely tired of telling Vodafone how silly it is to continue holding its stake in Verizon Wireless. This year’s preliminary results make it crystal clear that such experts should reserve their prognostications to the comfy furnishings industry,” says Ovum’s Green pointing out that Verizon Wireless’s revenue growth was 14.5 per cent-the same rate that Vodafone achieved in the more buoyant markets of Eastern Europe, Middle East and Africa, Asia Pacific and Affiliates.

There has been precious little speculation, thus far, regarding how Colao will carry things forward when he takes over in July. Speaking at the results press conference, he said that the company would “continue to stimulate volume where prices are collapsing”, and there will be “continued focus on cost cutting measures”. We can also expect “a big push in mobile data” with the possibility of further acquisitions in the mobile internet space, plus the “creation of a thriving mobile advertising market”. Though the biggest challenge of all, said Colao, “will be how to follow Arun’s example.”


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