Vengeance is mine
(Daily Mail (London) (KRT) Via Thomson Dialog NewsEdge) Jan. 29--The woes of Vodafone chief executive Arun Sarin could trigger his departure before the end of the summer and give a former rival a second chance to take the top job. Vittorio Colao, head of RCS Media Group, the Italian firm that owns the Corriere della Sera daily newspaper, was the highly regarded head of Vodafone's Italian and southern European operations, but lost out to Sarin in the race to the top job.
He is tipped to take over as Sarin languishes on the ropes. City spread-betting firm Cantor Index is laying odds of 5/2 that Sarin will be gone by September.
"Colao was the brightest of Vodafone's young chiefs and he left suddenly in July 2004," said one City source. "If Vodafone drops Sarin, he would be a popular replacement, with perhaps deputy chief executive Julian Horn-Smith standing in until he could be recruited."
The rumours about Sarin come as major shareholder Standard Life Investments urged the company to sell its American operation to partner Verizon, despite the 40 per cent tax bill it would incur on the profit.
The source said: "Sarin has never been under more threat. Lord MacLaurin, Vodafone's chairman, has been effectively sidelined by the leaking of his retirement. All the talk is that incoming chairman Sir John Bond will sack Sarin, but the market should not rule out MacLaurin acting decisively. He has considered ditching Sarin, but did not get the support of enough Vodafone non-executives."
Sources close to Vodafone dismissed the story. "This is highly speculative," one said. "There has been a string of rumours recently."
Sarin had a rough ride almost from day one and it was little help that he inherited his position from the charismatic Sir Chris Gent.
Sarin joined a company that had rocketed into the upper echelons of the FTSE 100 on a wave of deals and derring-do by Gent.
By then, investors had tired of huge deals that seemed to destroy shareholder value, and in Sarin, they were told, MacLaurin had opted for an operator supreme. So there were cries of anguish from shareholders when Sarin went hell for leather to buy AT&T Wireless. Not only did he fail, pulling out as shareholders protested angrily at the cost, but he destroyed every grain of goodwill that Verizon Communications, the dominant partner in Vodafone's American business, had left.
The Japanese arm, meanwhile, accounting for a fifth of Vodafone revenues, has teetered on the brink of disaster for years. It is still far from certain that Sarin's remedies have turned the business round.
A string of deals, including the 2.7 billion acquisition of Turkey's Telsim in December, brought further disquiet for investors. Sarin looks more like a deal addict than the promised sensible operator.
Worse still, Vodafone's shares have massively underperformed the market. They are down 5.7 per cent since the start of this year and 13 per cent down on where they were 12 months ago.
"It is clear that we are entering the final period of Sarin's reign," said a senior City source. "The question is where the company goes next."
After appointing a semiinsider last time -- Sarin was previously a non-executive director -- the board is likely to look further afield.
The source added: "The Italians have a saying that revenge is a dish best served cold. Perhaps Colao is about to sample the recipe."
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