THE VODAFONE THREAD

The Times December 22, 2006

Not quite déjà vu at Vodafone

The spirit of Yogi Berra hovered yesterday in the Vodafone boardroom. It was the New York Yankees catcher who once said: “It feels like déjà vu all over again.” Vodafone’s board members, no doubt, know the feeling.
In 2004, Britain’s biggest mobile phone company had a minority stake in Verizon and sought to swap out of it to snap up AT&T Wireless. It failed, losing out to Cingular Wireless. Two years on, Vodafone’s recent history in the US looks likely to repeat itself in India. Vodafone holds a minority position in Bharti Airtel and is looking to sell out to take control of the No 4 mobile operator, Hutchison Essar. Odds on, it will be outbid again, this time by Reliance Communications backed by private equity.



But for all the apparent similarities, the stories are different.

Arun Sarin is feeling safer in his job. Just a year ago, Mr Sarin had neither the total support of his board, nor of the investment community. He was in no position to venture a $13 billion opportunistic bid in India. He still has a fair way to go to deliver the kind of returns that convince shareholders. But boardroom politics seems to have been put to rest.


Mr Sarin, backed by his new chairman, is expected to stay for another couple of years.

Mr Sarin has set out a strategy of selective acquisitions in emerging markets. Vodafone cannot afford to stand aside in a country adding nearly 7 million mobile customers a month. At the same time, Vodafone’s statement this morning is expected to stress it is acutely cost conscious.

Vodafone’s bid for Hutchison Essar says more about the return of confidence in Newbury than its future in India. The message is that the old acquisitive Vodafone is a thing of the past, replaced by a Vodafone that is selective, price-sensitive but not shy. This leaves Mr Sarin in the unenviable position of bidding for an asset he knows he will probably fall short of buying. But, at least, he seems like a man back in charge, mindful but not hobbled by history.