Gent’s decision came hours after one of his principal allies, Vodafone’s chairman Lord MacLaurin of Knebworth, publicly backed current CEO Arun Sarin.
On my return from a business trip to South Africa, I have read the recent press comment about Vodafone with great concern, said MacLaurin in the statement. I want to make it clear that I and the board are totally supportive of our chief executive, Arun Sarin, as he takes the company forward in changing and challenging times. Any other suggestion is completely untrue.
It has been a bloody two weeks for Vodafone, as reports emerged in the UK media of a bitter boardroom split. It all began on February 27 when Vodafone shocked the markets with a warning that its growth rate was to slow to between 5% and 6.5% in fiscal 2007, compared to a forecast 6% to 9% this year. It also said that between 23bn and 28bn pounds ($40bn and $48.7bn) would be wiped off from the value of Vodafone’s assets, mostly related to its $188bn takeover of the German conglomerate Mannesmann AG.
The boardroom meeting prior to this announcement to discuss the asset write-down reportedly got heated at best as a group of old guard board members thought to be loyal to Gent sought to oust Sarin, due to his readiness to consider offloading Vodafone’s crown jewels, namely its wireless assets in Japan and the US.
Sarin survived but the following weeks were dominated by bitter back-biting and an apparent whispering campaign against Sarin. This added to the already poisonous atmosphere after a number of frustrated Vodafone shareholders openly questioned Sarin’s leadership and global strategy, and called for asset sales in order to ensure greater returns for shareholders.
Last week however Sarin began his fight back, and one of Gent’s old guard was soon given his marching orders, with the announcement last Wednesday that chief marketing officer and executive director Peter Bamford would be leaving at the end of March. Another Gent man, Vodafone’s deputy chief executive Julian Horne-Smith, is due to leave the company in the summer, and former finance director Ken Hydon departed after the company’s annual meeting last July.
All eyes will be now be on two people: Penny Hughes, chairman of Vodafone’s remuneration committee, who was also reportedly one of those Vodafone’s executives with misgivings about Sarin, and MacLaurin, who despite his declaration of loyalty to Sarin, is scheduled anyway to be replaced later this year by HSBC chairman Sir John Bond. Once this happens, Sarin will have appointed all the current executive directors at Vodafone.
The last few days will leave a bitter taste in the mouth of Gent, who received a standing ovation when he stepped down as Vodafone’s CEO in 2003. In an extraordinary emailed statement announcing his decision to cut his last remaining tie with Vodafone, Gent hinted at his anger at the current state of affairs at the company. Gent insisted he was not responsible for the whispering campaign or conspiracy, and that any allegations that he used the position of life president to interfere with the company and obstruct the current management were without foundation. He said he had taken the decision after considerable thought and with much regret.
However, in a barely concealed reference to Sarin, Gent said: When I was an executive, relationships within the company and at board level were characterized by openness and trust. We were mercifully free of company politics and blame culture. Gent’s statement conspicuously contained no mention of Sarin.
Shares in the UK operator rose 4.8% to 130.75 pence ($2.26) on the London Stock Exchange, yet it is unclear whether this rise has anything to do with Gent’s departure. It is more likely to be in response to the news that Vodafone has reportedly received an unofficial offer for its stake in Verizon Wireless. According to a weekend report in The Business newspaper, US telecom giant Verizon Communications Inc has made an informal approach to Vodafone about buying Vodafone’s 45% stake in their Verizon Wireless joint venture for about $40bn.
We have made our interest in acquiring Vodafone’s stake in Verizon Wireless clear, a Verizon source told the paper. The ball is now in Vodafone’s court.
Analyst group Dresdner Kleinwort Wasserstein called the weekend’s developments hugely positive. It pointed to reports that a group of private equity companies was considering its own bid for Vodafone’s troubled Japanese operation, the $40bn plus offer for Vodafone’s US stake, the conclusion of the recent boardroom spate, and a rather far-fetched report that a group of private equity companies were considering a bid for the whole of Vodafone, for its optimism.
