Nov 22, 2008

Personality - Arun Sarin;Pushing frontiers across continents

Joji Thomas Philip

Arun Sarin isn’t a man who rests on his laurels. After stepping down as CEO of Vodafone in July 2008 with the hosannas of the City of London ringing
pleasantly in his ears, he certainly hasn’t walked off into the sunset.

To the inevitable ‘what next’ question, his answer is succinct yet discreet: “My next venture will definitely have to do with something global, but it will involve India, it will be related to technology and will also be linked to investments.”

“I’ve been keeping busy...I’ve trekked in the Himalayas across Nepal and Bhutan, caught up with friends and moved back to California,” he says of the preceding months, but that is obviously a sabbatical, a breather he’s taken several times in his 30-year professional career, just before taking on a new challenge.

Much has been said about 54-year-old Sarin’s military school background in Bangalore and his prowess as a boxer in his youth, but even his later interest in surfing may have contributed to his near-legendary pugnacious ability to stand up to sustained battering.

Though best known in India for pulling off the acquisition of Hutchison Essar, Sarin earned the reluctant admiration of his peers in London’s corporati when he exited markets where Vodafone was not making headway, fought off a coup led by shareholders opposed to his decisions, embraced convergence, and most importantly, turned the company’s Euro-centric worldview towards emerging markets (especially India) and putting it back on the path of profitability.

Even the Hutchison Essar deal was ‘touch and go’ as Vodafone was unsure of whether it could beat its competitors, especially, the ‘Indian players’ till the last moment. More so since Sarin had to also battle his own shareholders to bid for it in the first place.

“In hindsight, Hutchison went to the right company but it could have gone either way,” he told ET. By the time Sarin announced he was stepping down in March 2008, he had the satisfaction of showing naysayers that he had steered the world’s largest telco towards a dramatic improvement in its financial results, buoyed by its performance in the emerging markets, led by India.

When he stepped into the shoes of Chris Gent at Vodafone in 2003, very few people knew, let alone thought much of, the small-built, wiry Indian from California with a curiously trans-continental accent. By the time he stepped down in 2008, Sarin had become a global Indian icon, a chief executive known around the world for effecting a spectacular, if tough turnaround, based on his belief in emerging markets.

“When I took over, Vodafone had very little exposure to emerging markets. But now, we are well spread and are no longer a predominantly European player and have operations across Asia and Africa,” he says.

Sarin’s business acumen may never have come to the fore had he followed the family tradition and joined the Armed Forces. He got admission to the National Defence Academy, but his mother put her foot down. So the disappointed brilliant student turned to engineering. “IIT Kharagpur was an accident,” says Sarin modestly. “I filled up the forms because a friend had an extra one.”

The IIT degree honed his already-sharp mind even more, leading him to a double masters in engineering and management from University of California at Berkeley in 1978. He then headed for a job in, what he calls “the most happening sector of those times”, the oil industry. But he already had his sights on the next big thing, telecom. Believing that mobile telephony was the boom area, he joined the Pacific Telesis Group.

“This was the time when there were so many doubts about this technology,” Sarin recollects. A decade later, when he was at the helm of Pacific’s AirTouch business, it demerged the mobile phone operator. Consequently, Sarin played a key role in AirTouch’s $66.5-billion merger with Vodafone and headed the combined entity’s operations in the US, Asia and Australasia. He left in 2000 when Vodafone merged its US interests into Verizon Wireless.

For the next two years, Sarin remained as a non-executive director at Vodafone while exploring the dotcom space. “The internet was very hot. I was fascinated by infospace and after oil and mobile telephony, this seemed to be the next big boom before the bubble burst,” he recounts frankly. So it was back to familiar territory for Sarin, telecom. There was also an emotional quotient: “When you sell your company, you also want to ensure it is doing well. This tempted me back.”

His mantra for Vodafone was to ‘push the boundaries’ and he became CEO at a time when both analysts and investors had started questioning the company’s aggressive takeover-driven expansion plans. Sarin fought pitched battles with them to push ahead with his agenda. It didn’t help as he had to back out of the auction for AT&T and announce a £23-billion writeoff in 2006, the biggest-ever loss in British corporate history.

In June 2006, he survived a “substantial protest vote” to stay at the helm and got further flak in August 2007 when he decided not to exercise Vodafone’s rights to sell 45% in Verizon Wireless. He was proved right when the value of the Verizon investment doubled but he does say that the failure to bag AT&T taught him valuable lessons.

“We went for it because we needed our own company and brand in the US. This was the same strategy for India. While we had a 10% in Bharti, we needed our own asset here,” he adds.

“If I had quit then, shareholders would have been worse off. In three areas, strategically, operationally and from people’s point of view, there was lot to be completed. Leadership required clear execution and I left as soon as we got a grip on these three key issues,” he says but adds that his resignation wasn’t because Vodafone had finally reached full-year profitability after several years, but because he was convinced that he had put a stable and forward-looking system and strategy in place.

Sarin’s leadership skills are readily acknowledged by competitors and friends alike. Vodafone Essar MD Asim Ghosh, for instance, says Sarin has an easy charismatic manner and the ability to cut through complex issues for a simple solution. “Most importantly, he has the courage to stick his neck out on big decisions. Without doubt, he is a great leader, not only in telecom, but also in global business,” says Ghosh.

Sarin’s salutary tale, and his ultimate vindication, came at a time when there were very few India-born CEOs on the high table. In a sense, he forged the template of the tough-talking, visionary Indian CEOs, paving the way for others.

“When I took over, there were no Indians in such roles. There are several now, (PepsiCo’s) Indra Nooyi, (Citigroup’s) Vikram Pandit, Lakshmi Mittal and Ratan Tata among others. They are the best of the breed and I see a lot more Indians in such roles of being global leaders over the next 5-10 years,” says Sarin.

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