Vodafone Chief Executive to Step Down
British Cellphone Firm Also Reports a Return to Profitability
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Wednesday, May 28, 2008
LONDON, May 27 -- Vodafone Group, the world's biggest mobile phone company by sales, announced the surprise resignation of chief executive Arun Sarin on Tuesday as it posted a return to full-year profitability.
Sarin, who led Vodafone's expansion into emerging markets such as India, Turkey and the Czech Republic in his five years in the top job, will be replaced by his deputy, Vittorio Colao.
Sarin, 53, faced disquiet two years ago when nearly 10 percent of Vodafone shareholders voted against his re-election as chief executive. Investors were unhappy about an acquisition-heavy expansion.
But Vodafone, based in Britain, has since outperformed expectations, and revenue growth in emerging markets has jumped. The company's global customer base has more than doubled, from 120 million to 260 million, under Sarin's tenure, and the company's share price has risen by about one-third over the same period.
After rising early, shares closed down yesterday 1.1 percent, at $32.20.
For the fiscal year ended March 31, Vodafone posted a profit of $13.25 billion, compared with a loss a year earlier when impairment charges on its Italian and German operations hurt earnings.
Revenue increased 14 percent, to $70.2 billion.
Sarin, an Indian-born U.S. citizen, has been credited with expanding Vodafone's operations in fast-growing emerging markets, such as Eastern Europe and India, through a series of large acquisitions, culminating in last year's purchase of a controlling stake in Hutchison Essar, one of India's biggest mobile-phone groups.
In 2004, the company lost out to Cingular Wireless during the fierce bidding war for AT&T Wireless, then the U.S. third-largest mobile operator, as it tried to expand its presence in the fast-growing U.S. market.
Colao, 46, now faces the same challenges as his predecessor, taking the helm of the company at a time when business growth is being challenged by the economic downturn and by rising inflation and food prices in the developing world, where it is targeting expansion.
Sarin said the company was interested in acquisitions in Africa and Asia, but he declined to say any more about potential deals.
