Vodafone chief faces shareholder revolt

26-07-2006

Vodafone chief executive Arun Sarin is set to face calls from a number of shareholders to quit his post today, as investors gather for the mobile phone giant's annual general meeting.

Pressure has been growing on Mr Sarin to resign amid slowing growth in the company's key markets, such as Europe, and dissatisfaction over the strategic direction he is taking Vodafone in.

City critics have voiced concern at the heavy expenditure Vodafone has invested in 3G technology and services, while accusing the company's management of responding slowly to problems within the Japanese market.

In Europe, Vodafone has also faced growing competition from rival mobile phone providers, amid falling call tariffs and the European Commission's recent decision to cap roaming charges.

The company announced in May that its losses had increased to £14.8 million, while its share price has also suffered from a slowing performance in recent months.

Morley Fund Management, which owns a 2.1 per cent share in Vodafone, said on Friday that it planned to vote against the reappointment of Mr Sarin as chief executive during today's meeting.

Legal and General, one of Vodafone's largest shareholders, said in a statement last night that while it was "clear that the company has not performed well either in operational or share-price terms", it would support the mobile phone operator's board.

The insurer said that it did not think it would be sensible to replace Mr Sarin as Vodafone's chief executive at the same time as Sir Ian MacLaurin is departing as the firm's chairman, to be replaced by Sir John Bond.

Defending his position yesterday, Mr Sarin insisted that "the huge silent majority of shareholders" supported Vodafone's management.

"We are taking all the right decisions, but any time you go through the kinds of changes we're going through, there may be people who are not happy with what's going on," he said.

"In my view, I have a sufficient level of support from shareholders and the board to continue running the company."

Despite its recent struggles, Vodafone yesterday announced that it had attracted 4.5 million new customers in the three months to June 30th, with Mr Sarin claiming that the results represented a "robust operating performance in testing markets".


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