Vodafone Plc looks set to maintain its ruthless momentum in future with the announcement that American wireless telecoms mover and shaker Arun Sarin will take over the CEO’s chair when Chris Gent retires next July.
The announcement took industry watchers by surprise, not only for its timing but also because current Vodafone chief operating officer Julian Horn-Smith had been seen by many as the most likely successor to Gent. It also surprised the London Stock Exchange, and Vodafone’s share price fell 2.21% on the day.
Vodafone chairman Lord MacLaurin described the appointment of Indian-born Sarin as part of a carefully orchestrated succession plan. Certainly Gent, the managing director of UK operator Vodafone Ltd from January 1985 before taking over the reins of the newly independent Vodafone Plc in January 1997, appears to be stepping aside for another man out of the same mould.
Sarin, currently a non-executive director of Vodafone, has been instrumental in many of the London, UK-based mobile giant’s most recent territorial gains. These include the $160bn hostile takeover of Germany’s Mannesmann in 2000 and the creation of US operator Verizon Wireless from the merger of Vodafone’s stateside assets with those of Bell Atlantic.
With much of Gent’s efforts to achieve near blanket global coverage now complete – although France remains unoccupied after Vodafone’s defeat for the hand of Cegetel SA earlier this month to Vivendi Universal – Sarin’s chief task now appears to be one of guiding the company as it seeks a leading role in the 3G voice and data services market.
Whether a deal-maker is the right person to achieve this aim remains to be seen. However, Sarin, known to be an ally of Gent’s and highly rated in the boardroom, has already proved his value to Vodafone and has been touted as a likely successor since 2000. But his services do not come cheaply.
Sarin’s role in the Mannesmann takeover netted him an ex-gratia award of over 9m pounds ($14.4m) in Vodafone shares and he was paid around 21.2m pounds ($33.9m) in 1999 while heading up the company’s US business.
He will now net a basic salary of 1.1m pounds ($1.76m) a year plus incentives but Vodafone’s shareholders will no doubt be keen to avoid the bad press the company gained with its previously monstrous bonuses.
Sarin joined the Vodafone family with the Gent-orchestrated 1999 takeover of US operator AirTouch Communications where he was CEO. He then headed the company’s US and Asia Pacific operations until resigning in April 2000 after the launch of Verizon Wireless.
He is currently CEO of San Francisco, California-based Accel-KKR Telecom, a telecoms-focused private equity investment house as well as a director of diverse firms such as The Gap, The Charles Schwab Corp and Cisco Systems.
Gent has previously made clear his intention to relinquish Vodafone’s helm. However, the timing still surprised many. Gent will stand down as CEO at Vodafone’s annual meeting next July, although he will act as a consultant until the end of 2003.
He leaves behind a legacy of aggressive but shrewd expansion, which has seen Vodafone grow to become the world’s largest mobile operator as well as the UK’s biggest company.