Vodafone Hits Full-Year Targets; CEO to Go
Arun Sarin, the chief executive who safeguarded Vodafone's dominance among mobile operators by expanding into emerging markets, announced his departure on Tuesday, saying he had achieved all he had set out to do.
He will be replaced by his deputy, Vittorio Colao, in July.
Analysts welcomed the smooth transition at the top of the world's largest mobile phone group by revenue but said that it had come slightly earlier than expected.
"I have achieved what I set out to achieve on becoming CEO and therefore I felt the timing was right," Sarin told reporters on a conference call, adding that he did not expect the group's strategy to change.
He warned that Colao, 46, will have to navigate the tricky economic slowdown ahead.
Vodafone made the announcement as it issued a solid outlook for 2009 and annual results for the year ending March 2008 either in line with or slightly ahead of forecasts.
Under Sarin, the mobile group expanded into faster-growing emerging markets such as India and Turkey and developed new tariffs and products for services such as downloading games and music to attract customers in the more mature markets of Europe.
"Arun Sarin ... leaves with his reputation intact," analysts at ING said in a note to clients. "He has successfully implemented Vodafone's new strategy after coming under intense pressure a couple of years ago.
"The timing ... may have caught the market unaware (maybe a year earlier than expected?), but Arun Sarin's successor is no surprise." During Sarin's time as CEO, Vodafone has increased its customer base from 120 million to more than 260 million, including its share of affiliates.
The British-based company said on Tuesday its annual group earnings before interest, tax, depreciation and amortisation (EBITDA) rose over 10 percent to 13.2 billion pounds ($26.11 billion) on revenues of 35.5 billion pounds.
Analysts were expecting EBITDA of 13.1 billion pounds and revenues of 35.3 billion pounds, according to Reuters Estimates.
Publishing its forecasts for the year ahead, Vodafone said it expected group revenue of between 39.8 billion and 40.7 billion pounds, with adjusted operating profit of 11 billion pounds to 11.5 billion pounds.
The results for the year to March 31 were boosted by booming growth from the EMAPA unit of businesses in Eastern Europe, Middle East and Africa, Asia, Pacific and Affiliates, which had 14.5 percent organic revenue growth.
The European unit had revenue growth of 2 percent.
Sarin said he expected operating conditions to continue to be challenging in Europe given the economic environment and ongoing pricing and regulatory pressures but added he expected positive trends in messaging and data revenue to continue.
Analysts at Cazenove said Colao was well known to investors and his appointment was likely to be seen as an indication of confidence in the performance of Vodafone's European operations.
Colao, who holds a business degree from Italy's prestigious Bocconi university and an MBA from Harvard, was previously a consultant at McKinsey.
He was appointed chief executive Europe and deputy group chief executive of Vodafone in 2006 after returning from two years away from the firm as Chief Executive of RCS MediaGroup.
The Indian-born Sarin, a U.S. citizen, became a Vodafone executive after his old firm, AirTouch Communications, was bought by the then fast-growing British mobile group in 1999.
He also left briefly before returning as Chief Executive in 2003.
He endured a tough time in 2006 with investors unhappy over his strategy for dealing with slowing European markets, having to defeat a challenge from rebel investors with about 10 percent of the shares who voted against his re-election.
But he has since won the respect of the City and investors with his decision to move into emerging markets, spearheaded by the acquisition of a controlling interest in India's mobile phone group Hutchison Essar.
He expects to take a break from work before returning to the U.S.
Shares in Vodafone were 0.4 percent lower.