LONDON (AFX) - Arun Sarin, the embattled chief executive of Vodafone Group, said a shareholder rebellion aimed at removing him from the mobile phone giant will end in failure.
The chief executive insisted that he would see off an expected revolt by a coterie of large institutional investors, who are planning to vote against his re-election to the board at tomorrow's annual general meeting.
'To the best of my knowledge, all of the resolutions we have at the AGM will pass with strong votes. I have a sufficient level of support from the shareholders and the board to continue running the company,' Sarin told reporters following the release of a first-quarter trading update.
Sarin's stewardship of Vodafone has come under intense scrutiny over the past year, with three profit warnings and a perceived lack of strategic clarity sparking a 25 pct plunge in the share price and bitter recriminations at board level.
Morley Fund Management, which owns 2.1 pct of Vodafone, on Friday took the unusual step of announcing that it would vote against Sarin's re-appointment. And Hermes and Standard Life will join the growing band of rebels, who together control around 10 pct of Vodafone, according to reports.
Sarin said the dispute was the inevitable consequence of a rapidly changing mobile phone industry.
'Any time you go through the kind of change you're going through now, there will be one or two or three people unhappy about what is going on,' said Sarin.
Investors' main gripe with Vodafone is a lack of clarity on the future direction of the company.
Just a year ago, Vodafone was committed to building on the global network of operators assembled by Sarin's predecessor, Christopher Gent.
But intensifying competition in its core European markets put Vodafone on the back foot, and the eventual sale of its underperforming Japanese business earlier this year was a tacit admission that a business model based on a 'global footprint' was not working.
Vodafone suffered another setback this morning when it emerged that Bill Murrow, a long-standing executive recently appointed to oversee a restructuring of Vodafone's ailing European division, had decided to quit 'for family reasons'. Sarin insisted that Morrow's departure 'had nothing to do with boardroom disputes' of earlier this year.
This morning's trading update underlined how difficult trading has become in Vodafone's core European markets, where penetration rates are often above 100 pct.
Service revenues declined 2.9 pct and 3.4 pct in Germany and Italy respectively, mainly due to regulatory cuts to mobile phone termination charges. Its UK business reported service revenue growth of 1.3 pct.
That was slightly better than expected and the shares rose 2-3/4 pence to 114 by 11.50 am.
The mobile phone giant signed up an extra 4.5 mln customers at its continuing business in the three months to the end of June, which was about 500,000 ahead of expectations.
That allowed Vodafone, which has issued three profit warnings since November, to reiterate its targets for the current year. The group is looking for organic mobile revenue growth of 5-6.5 pct for the fiscal full year, with EBITDA margin falling by around one percentage point.
'Whilst many markets in Europe remain highly competitive, we are on track with our revenue and cost initiatives in this region,' said Sarin.
Vodafone has been investing in emerging markets like Turkey and India to offset weakness in Europe. Last year's takeover of Turkish operator Telsim saw a further 11.7 mln subscribers come on board, taking its total customer base to 186.8 mln by the end of the quarter. . Another area growth of growth identified by Vodafone is broadband, and Sarin said the company would launch bundled internet access and mobile products in its top eight countries by the end of the financial year.
Vodafone is more like to rent capacity from the likes of BT Group than to buy or build its own broadband network; Sarin this morning said he would prefer to be 'asset light' in the fixed-line arena.
Overall, group turnover grew 6.4 pct on an underlying basis in the first quarter, fuelled by a 4.5 pct rise in group mobile service revenues. simon.duke@afxnews.com sd/lam COPYRIGHT Copyright AFX News Limited 2005. All rights reserved. The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News. AFX News and AFX Financial News Logo are registered trademarks of AFX News Limited
The chief executive insisted that he would see off an expected revolt by a coterie of large institutional investors, who are planning to vote against his re-election to the board at tomorrow's annual general meeting.
'To the best of my knowledge, all of the resolutions we have at the AGM will pass with strong votes. I have a sufficient level of support from the shareholders and the board to continue running the company,' Sarin told reporters following the release of a first-quarter trading update.
Sarin's stewardship of Vodafone has come under intense scrutiny over the past year, with three profit warnings and a perceived lack of strategic clarity sparking a 25 pct plunge in the share price and bitter recriminations at board level.
Morley Fund Management, which owns 2.1 pct of Vodafone, on Friday took the unusual step of announcing that it would vote against Sarin's re-appointment. And Hermes and Standard Life will join the growing band of rebels, who together control around 10 pct of Vodafone, according to reports.
Sarin said the dispute was the inevitable consequence of a rapidly changing mobile phone industry.
'Any time you go through the kind of change you're going through now, there will be one or two or three people unhappy about what is going on,' said Sarin.
Investors' main gripe with Vodafone is a lack of clarity on the future direction of the company.
Just a year ago, Vodafone was committed to building on the global network of operators assembled by Sarin's predecessor, Christopher Gent.
But intensifying competition in its core European markets put Vodafone on the back foot, and the eventual sale of its underperforming Japanese business earlier this year was a tacit admission that a business model based on a 'global footprint' was not working.
Vodafone suffered another setback this morning when it emerged that Bill Murrow, a long-standing executive recently appointed to oversee a restructuring of Vodafone's ailing European division, had decided to quit 'for family reasons'. Sarin insisted that Morrow's departure 'had nothing to do with boardroom disputes' of earlier this year.
This morning's trading update underlined how difficult trading has become in Vodafone's core European markets, where penetration rates are often above 100 pct.
Service revenues declined 2.9 pct and 3.4 pct in Germany and Italy respectively, mainly due to regulatory cuts to mobile phone termination charges. Its UK business reported service revenue growth of 1.3 pct.
That was slightly better than expected and the shares rose 2-3/4 pence to 114 by 11.50 am.
The mobile phone giant signed up an extra 4.5 mln customers at its continuing business in the three months to the end of June, which was about 500,000 ahead of expectations.
That allowed Vodafone, which has issued three profit warnings since November, to reiterate its targets for the current year. The group is looking for organic mobile revenue growth of 5-6.5 pct for the fiscal full year, with EBITDA margin falling by around one percentage point.
'Whilst many markets in Europe remain highly competitive, we are on track with our revenue and cost initiatives in this region,' said Sarin.
Vodafone has been investing in emerging markets like Turkey and India to offset weakness in Europe. Last year's takeover of Turkish operator Telsim saw a further 11.7 mln subscribers come on board, taking its total customer base to 186.8 mln by the end of the quarter. . Another area growth of growth identified by Vodafone is broadband, and Sarin said the company would launch bundled internet access and mobile products in its top eight countries by the end of the financial year.
Vodafone is more like to rent capacity from the likes of BT Group than to buy or build its own broadband network; Sarin this morning said he would prefer to be 'asset light' in the fixed-line arena.
Overall, group turnover grew 6.4 pct on an underlying basis in the first quarter, fuelled by a 4.5 pct rise in group mobile service revenues. simon.duke@afxnews.com sd/lam COPYRIGHT Copyright AFX News Limited 2005. All rights reserved. The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News. AFX News and AFX Financial News Logo are registered trademarks of AFX News Limited