Arun Sarin: Vodafone’s boss under seige

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Arun Sarin is a man under siege. The head of Vodafone, the mobile phone company and one of the most powerful businessmen in the world is facing eroding shareholder confidence in the effectiveness of his own personal performance, increasing pressure from telecoms competitors, the risky launch of the 3G generation of phones – all this plus a powerful internal vendetta against him the top of his own firm.

He was a relative unknown when in the summer of 2003 he was appointed the new chief executive in succession to Sir Christopher Gent, the man who recreated Vodafone into a global network operator through a series of big acquisitions, culminating in the £101 billion purchase of Mannesmann in 2000. 

While Gent is a charismatic man who spoke with passion and certainty, Sarin is more circumspect, more ready to admit that there are some things he doesn’t know. In a way, that makes him more human.

The son of middle-class, but not hugely wealthy, parents, Sarin excelled at school, especially in languages and mathematics; he gained a place at the elite institute of technology in Kharagpur, the equivalent of America’s MIT in the US.

Young Sarin wanted to join the army but his mother, a powerful influence on the family, thought that business would be a better bet. He took her advice and did what countless others do – took off for America.

After graduating from Berkeley, the University of California with an MBA, Sarin became a management consultant. But in the late 1980s he joined a company that would bring him into contact with Vodafone. It was called Pacific Telesis, a telecommunications group that eventually demerged its mobile arm, Airtouch, in 1993. When Gent struck a merger deal with Airtouch in 1998, it was Sarin who helped to cement it. As a reward, Gent made Sarin head of Vodafone’s American operations.

And when Gent launched his hostile bid for Mannesmann of Germany, Sarin helped the Englishman garner support from US shareholders for the takeover.

Since moving into Gent’s chair, nothing seems to have gone right for Sarin:

  • Feb 2004: Vodafone suffers a rare defeat, after its $38bn cash bid for AT&T Wireless, the US number three, is beaten by Cingular
  • Dec 2005: Arun Sarin’s first big deal. Buys Telsim of Turkey for $4.5bn, but he is criticised for overpaying.
  • Feb 2006: Shock writedown of £28bn amid a warning about slowing sales. Criticism of Sarin mounts

Now in recent weeks there is growing speculation that from former Vodafone directors are waging a whispering campaign against 51 year old Sarin.  It is even rumoured that Gent, now the company’s life president but without any executive responsibilities, had wanted to vote against Sarin’s re-election at the last annual meeting but was persuaded to drop the proposal at the 11th hour.

A rare ray of sunshine for Sarin is the possible sale of Vodafone’s struggling operations in Japan for around £6 billion and £8 billion. If it goes through, the proceeds would be returned to shareholders, making them a little happier.

Thanks for reading Big Business

David Davis
www.writer4business.com

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