India-born Vodafone chief executive Arun Sarin is set to step down on July 29 after an eventful five-year tenure leading the world’s largest telecom company. He announced his decision on Tuesday simultaneously announcing that Vodafone has recorded a $13.2 billion net profit (Rs 55,440 crore) for the last financial year ended March 31, 2008.
The net profit comes is a great boost after the company had recorded a loss of $10.7 billion for the year ended March 31, 2007. Sarin had faced a minority shareholder revolt in 2006 when around 10 per cent had voted against his continuation. Many disliked his strategy of exiting the Japanese and some European and markets and investing in emerging markets like India.
Arun Sarin said: “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.”
There is a lot of speculation on where the 53-year old Sarin might move after he finishes with Vodafone and there is a possibility that he may join private equity investment firms focused on emerging markets.
Under Sarin Vodafone expanded into emerging markets including Romania, Czech Republic, Turkey, and most recently, India. Vittorio Colao, 46, the deputy group chief executive officer of Vodafone and in charge of Europe operations, would fill Sarin’s shoes.
Sarin, an alumnus of Indian Institute of Technology, Kharagpur, led the acquisition of Hutchison Essar, which is still the single largest foreign investment made in the country. Vodafone paid $11.1 billion for a 66.7 per cent stake in the company. Sarin was instrumental in retaining a minority stake in Verizon Wireless, the US-based telecom carrier. Sarin also set up the Arun Sarin Electronic Materials Research Laboratory at IIT Kharagpur in 2006.
"It was Sarin's strategy to make inroads into emerging markets. He made the company think like a true global player," said a Mumbai-based analyst working with an international research firm. According to him, Hutch was mainly a focused financial investor and it never bought a global outlook to the Indian operations.
When contacted Asim Ghosh the managing director of Vodafone India said: “I do not want to comment on this.” But another senior Vodafone India official said Sarin retained the entire management team of Hutch Essar, which was functioning well.
After the acquisition, Vodafone introduced ultra low-cost handsets along with new branding strategy and engaged in global partnerships in content.
As a result the customer base has almost doubled and Vodafone became the third largest mobile operator in India overtaking BSNL. Vodafone now has over 44 million customers in India.
"Vodafone Essar in India is delivering very strong growth and performing in line with our acquisition plan. Revenues increased by 50 per cent during the year driven by rapid expansion of the customer base with an average of 1.5 million net additions per month since acquisition," Sarin said on Tuesday.