What Is In Store For Vodafone?

Implications: It is easy to kick a person on their way out the door.  The reality is that Sarin did a pretty good job with the hand he was dealt with.   However, Colao has the makings of a mess now.

Analysis: Investors need to understand that Sarin was doing the best he could with the hand he was dealt with.  His relationship with Verizon was never pleasant.  Verizon is run by former Bell Atlantic and NYNEX executives.  Sarin is originally from AirTouch.  This alone told industry insiders he was not long for Verizon.  He left and joined Vodafone.

Vodafone had spent billions in its deal with Bell Atlantic, which resulted in Verizon Wireless.  Sarin did not have a home in Verizon Wireless and so Vodafone made sense.  However, let us not forget that Sarin took over the reins of Vodafone from Chris Gent in 2003, when the global economy was still reeling from the telecom and dot com meltdown.  Sarin had his hands full just trying to keep Vodafone stable during a downturn.  Yet at the same time, Sarin was in an acquisition mode.  Unfortunately, Sarin never bothered integrating any of his operations properly.

However, none of this will make the job of his successor, Vittorio Colao, any easier.  I fact, what Sarin has left Colao is a major job; the strategic repositioning of Vodafone.  Investors need to ask Colao the following question:  What is Vodafone; a patchwork of investments?  It is certainly not a brand name.

What is in store for Vodafone?  That is the question.

Colao needs to establish Vodafone as a brand.  But how?  The only way to do that is by spending money, which Vodafone may not have much longer.  Whatever Vodafone decides it will cost money.  Talk about getting stuck with trouble.

One thing is for sure, if Vodafone’s cash situation goes south, Colao can spend his tenure restructuring the company, which will include performing merger integration of the assets that Sarin had acquired and centralizing decision making.