Vodafone has today announced that, after five years in the role, Arun Sarin will be retiring as Chief Executive at the end of the Company's AGM on 29th July 2008. He will be succeeded by Deputy Chief Executive Vittorio Colao.
Sarin became Chief Executive in July 2003 and over the last five years has led the company through a period of significant change, both strategic and organisational. Under his leadership Vodafone has developed and implemented a new strategy to become a total communications company, which is already delivering results. As part of its strategy Vodafone has also expanded into emerging markets including Romania, Czech Republic, Turkey, and most recently, India where Arun Sarin led the acquisition of Hutchison Essar, which is the largest foreign investment made in the country.
In portfolio management, during this time the Company also disposed of its businesses in Japan and Sweden, together with interests in Switzerland and Belgium. In Europe the new strategy has delivered new products, improved revenue and significant cost reduction.
Organisationally the Company says it has been structured to take advantage of its significant global footprint by becoming an integrated business with a clear distinction between global and local activities.
During his time as Chief Executive the Company has also grown its proportionate customer base from 120 million to more than 260 million globally and over this period Vodafone has consistently delivered strong results. Returns to shareholders over this period have also been very positive with dividends increasing from 1.69p to 7.51p, an increase of more than 400%. Sarin also built a new senior management team and taken the lead on major industry issues, including mobile broadband and internet services.
Commenting, Chairman Sir John Bond said: "Arun has done a tremendous job as Chief Executive. He has led the Company with distinction and navigated Vodafone through a period of rapid change. He has developed a new strategy for the business and significantly expanded our footprint in emerging markets. The acquisition in India was very well timed and executed. The Board has a great deal to thank him for and I would like personally to thank him for all he has done for the business and wish him and his family all the best for the future. In Vittorio Colao we have a fine successor and I am looking forward to working with him in his new role."
Sarin commented: "It has been a privilege to lead Vodafone for the last five years and to have been involved in the company for such a long time. I feel that I have accomplished what I set out to achieve, particularly in developing and implementing a new strategy. I am very proud of what Vodafone and its 71,000 people have achieved and the good momentum we have in the marketplace. I know that the business is in capable hands with Vittorio Colao. Having worked with him for many years I know that he has the experience and vision to take Vodafone on to future success."
Vodafone Group Plc also announced today that Non Executive Directors Michael Boskin and Jürgen Schrempp will not be seeking re-election at the AGM. Michael Boskin joined the Vodafone Board in 1999 on Vodafone's merger with AirTouch Communications Inc, having served for a number of years previously on the AirTouch Board. Jürgen Schrempp became a Director of Vodafone in 2000 when Vodafone completed its acquisition of Mannesmann, having been a member of Mannesmann's Supervisory Board before then.
Sir John Bond said: "I would like to thank Michael and Jürgen for their contributions and for the different and important perspectives each has brought to our Board. Both have served with distinction and I am very grateful for their tireless work on our Board Committees, especially Michael's Chairmanship of the Audit Committee. Jürgen has, at one time or another, been a member of each of our principal Board Committees. We wish them both well in the future."
Vodafone: Arun Sarin Leaves 'em Wanting More - IDC's John Delaney Comments
This morning, Vodafone announced its results for the year ending 31 March 2008. Group revenues are up 14.1% to £35.5 billion, with operating profits up 5.7% to £10.1 billion. Revenues in Europe grew by 2.0%; revenues in EMAPA, the division that includes emerging markets such as India and Africa, grew by 45.1%. It was also announced that Vodafone Group CEO Arun Sarin intends to step down in July, to be succeeded by the CEO of Vodafone Europe and Deputy Chief Executive of Vodafone Group, Vittorio Collao.
In the end, it turns out that Arun Sarin's forte was the long game. After five years as the frequently beleaguered CEO of the Vodafone Group, Arun Sarin goes out on a high note.
In its 2007-08 results, Vodafone has announced revenues that exceed both consensus expectations and its own guidance. Its core European operations tell a story of well-managed maturity, with modest growth in ‘old' service revenues, strong growth in ‘new' service revenues and steadily improving margins. Its ‘EMAPA' operations, where growth is driven mainly by uptake rather than usage, show strong growth in all services, and comprise a fast-increasing proportion of Vodafone's total revenues. The combination of well-managed maturity and vigorous youth in the business shows good prospects of continuing, being underpinned by a number of long-term structural initiatives that were put in place during Sarin's reign - initiatives such as network sharing, facilities outsourcing, back-office consolidation and the terminal platform programme. And to complete the picture of a well planned and confidently managed succession, Sarin announces that he will soon (but not too soon!) be stepping down as CEO in favour of the man who, as soon as he re-joined Vodafone nearly two years ago, was widely identified by external commentators as Sarin's chosen successor.
The most remarkable thing about this stately transfer of power in a well-run kingdom is that it feels entirely predictable. It's not an outcome that many people would have bet on 18 months ago.
Arun Sarin has had a torrid time of it during much of his tenure as CEO. The basic problem he has had to deal with is that it is easier to command affection and respect by building an empire, than by managing one. His predecessor Chris Gent was the empire-builder par excellence, and is still best known today as the hero of the battle of Mannesmann - nothing is more endearing to the British public than thrashing the Germans, however long ago. By contrast, Sarin's image was damaged early on by the failure of a move to extend Vodafone's reach by acquiring control of US operator AT Wireless. The nadir of his reign came in 2006, when Vodafone announced the biggest loss in UK corporate history (ironically, a delayed result of the Mannesmann acquisition) and 14% of investors failed to vote confidence in Sarin at the company's AGM.
And then, it all started to come good. The turning point was in early 2007, when Vodafone acquired the Indian operator Hutchison Essar. Sarin's reputation was enhanced greatly by both the substance and the style of this acquisition. 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 stylewell, 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. Subsequently, two well-received sets of annual results in succession, punctuated by the contemptuous swatting-away of an attempt to force the divestment of Vodafone's stake in Verizon Wireless, have kept Sarin's stock travelling steadily north.
Time for Sarin to leave on a high note. It's a decision that seems obvious, now that it's been announced. But it's only in recent months that having a high note to leave on looked like anything better than a very long shot.