Vodafone's Arun Sarin bows out on his terms

By Kate Holton

LONDON (Reuters) - When Vittorio Colao returned as deputy chief executive to mobile phone giant Vodafone in 2006, the news sparked speculation that he was being set up to replace the "beleaguered" CEO Arun Sarin.

Almost two years later, the Italian has indeed replaced the Indian-born Sarin, but under much more favourable circumstances.

On Tuesday, both men enjoyed the plaudits as analysts congratulated Sarin for his leadership in taking Vodafone into emerging markets while making the most of sales from slowing core European countries.

"Arun Sarin is to step down after five years as Vodafone's CEO and he leaves with his reputation intact," ING analyst Damien Chew said in a note to clients.

"He has successfully implemented Vodafone's new strategy after coming under intense pressure a couple of years ago (and) ... Arun Sarin's successor is no surprise."

Sarin, who was appointed CEO in 2003, brought an abrupt end to his honeymoon with investors after losing the battle to win control of U.S. mobile carrier AT&T Wireless in 2004.

In 2006, he had to announce an asset writedown of more than 23 billion pounds and later that year came under pressure to spell out more clearly how he planned to cope with the slowing growth in core European markets and new technologies.

At a shareholder vote in July of that year, he had to sit through individual shareholders complaining about how the company was being run and in the vote for his re-election, watched as nearly 10 percent of ballots were cast against him.

But Sarin, a 53-year-old U.S. citizen, has since won round those critics by making early moves into emerging markets to offset falling prices in Europe, with the highlight the acquisition of a controlling stake in India's Hutchison Essar.

CRITICAL TIME

"At a time when many are clamouring after so-called emerging market growth assets, he was (ahead) and paid a lower price," Collins Stewart analyst Mark James told Reuters. "And as a result, the company has better growth prospects than many of its peers.

"I think (Hutchison Essar) was a pretty critical deal. It is fair to say it transformed the growth profile of the company. A turning point for the company and a turning point for him."

Vodafone's offer for Hutchison Essar gave it a total value, including debt, of $18.8 billion, making it Sarin's biggest acquisition and Vodafone's largest since its 178 billion euro purchase of Germany's Mannesmann in 2000.

In its annual results on Tuesday, Vodafone said it now had over 260 million proportionate mobile customers worldwide with strong growth during the year in the emerging markets division and in particular, from the country of Sarin's birth.

The son of an Indian military officer, Sarin was sent to a military boarding school in Bangalore, now India's answer to Silicon Valley in the United States. He went on to study engineering at the elite Indian Institute of Technology in Kharagpur.

He spent much of the next three decades in California after moving to the United States in the 1970s and gained a degree in engineering and an MBA from the University of California at Berkeley in 1978.

Sarin cut his teeth at U.S. telecoms group Pacific Telesis, from which AirTouch was spun off in 1994. As AirTouch's president and chief operator officer, he helped sell the group to Vodafone in 1999.

At Vodafone, Sarin took over the enlarged group's operations in the United States, Asia and Australasia, but left in 2000 after the firm rolled its U.S. interests into Verizon Wireless.

Sarin returned in 2003 and succeeded CEO Chris Gent, who had built Vodafone into a global giant. Sarin will be remembered for steering it in the right direction.