Boost for Vodafone boss Sarin

Shares in Vodafone rose today as the mobile phone giant reported revenues growth in line with expectations – giving a much needed boost to under-pressure chief executive Arun Sarin.

Mr Sarin faces the prospect of a major shareholder vote against his re-election tomorrow as the owners of more than 10% of the company’s shares - including Standard Life, Hermes and Morley Fund Management – are expected to oppose his appointment at the firm’s annual general meeting.

But Mr Sarin defended his position saying he has the support of the silent majority along with that of the board.

Shares rose 2.5p to 113.75p after Vodafone said it achieved 6.4% organic growth in total mobile revenues for the quarter to June 30 and was on target to achieve between 5% and 6.5% growth for the year.

However, the surprise departure of Bill Morrow from the group for family reasons also announced today is seen as a major blow for Vodafone. He had been viewed in the City as a potential successor to Mr Sarin.

Christian Maher, analyst at Investec Securities, said Mr Morrow’s departure was a “major shock for Sarin given Morrow’s high profile role and his recent commitment to some of the toughest jobs in the group, including running Japan and running the UK”.

Announcing its key performance indicators today, Vodafone said it experienced continued intense competition across Europe during the quarter but Verizon Wireless in the US and several of the group’s emerging markets operations had performed well.

In the UK, Vodafone said its customer base fell by 119,000 in the quarter because of the extremely competitive market. Across Europe, Vodafone gained 891,000 customers bringing its total in the region to £94.1m (€138m).

Across the group, Vodafone added 4.5 million customers bringing the total to 186.8 million worldwide.

Mr Sarin said this was a “robust operating performance in testing markets”.

He added Vodafone was experiencing a period of transition along with the rest of the industry.

“We have hit saturation levels so clearly the emphasis is on innovation,” he said. “That is why we have been one of the early players in 3G.”

“The key focus is selling additional services to existing customers.”

Analysts said today’s data was good enough to fend off attacks in the short-term. But John Delaney, principal analyst at Ovum, said “there’s still the nagging question of the long term”.

Richard Hunter, head of UK Equities at Hargreaves Lansdown Stockbrokers, said: “In the overall scheme of things, these numbers are probably a minor distraction ahead of the potential fireworks at tomorrow’s AGM.

“Nonetheless, the addition of a net 4.5 million new customers in the company’s first quarter – that is, excluding the near 12 million customers gained through acquisitions – underlines Vodafone’s position as a dominant global player.”

Tomorrow’s protest vote follows Vodafone’s warning last year of slowing revenues growth, while in May it announced losses of £14.9bn (€21.87bn) after a £28bn (€41.1bn) write down on the value of its assets.

The AGM will give shareholders the opportunity to lobby former HSBC chief Sir John Bond, who takes over from Lord MacLaurin as Vodafone’s non-executive chairman at the meeting. He is expected to oversee a review of the company’s board.

An even larger number of shareholders – estimated at around 15% – are forecast to vote against the company’s remuneration report, which reduces the performance hurdle required for directors to qualify for share options.