Vodafone chief on farewell call

By PETER GRIFFIN


He's no longer heading the biggest mobile phone company in the world but that's proved no reason for Sir Christopher Gent to give up his trademark red braces and loud ties.

After all, the 55-year-old former chief executive of mobile giant Vodafone has unfinished business with his employer of 18 years - one last visit of the subsidiaries that sprang up around the world under his leadership.

It's part holiday, part farewell tour, a trip strategically timed to coincide with England's rugby world cup victory, which Gent watched from the stands and describes simply as "extraordinary".

After claiming his fair share of ups and downs in the six-and-a-half years leading Vodafone, Gent, who stepped down in July, felt bowing out on a good note was favourable to "being driven off with boos and heckles from shareholders and the media alike".

He's remembered best for expanding the Vodafone empire through massive acquisitions - first the £36 billion buy-up of US operator AirTouch, then the £112 billion hostile takeover of German engineering and telecoms group Mannesman.

His deal-making went on as the telecoms industry rode high on bloated and unsustainable valuations. Even radio spectrum licences for 3G mobile services were selling for crazy amounts - Vodafone paid £6 billion in Britain alone.

Overpriced acquisitions aside, many blame Europe's spectrum auctions for the massive telco collapse that followed.

"The auctions were distorted," says Gent. "The UK Government and the German Government decided they were going to transfer wealth from industry to taxpayers. They didn't run open and fair auctions."

The penalty paid, he argues, is that Europe lost its edge in mobile development as major operators buckled under the pressure of debt.

Gent believes Japan, where Vodafone is now a major player, is about a year to "18 months ahead" of the rest of the world, due to the absence of auction madness there.

The financial charges associated with the acquisitions helped set a record for the biggest British corporate loss last year when Vodafone finished £13.5 billion in the red.

In the midst of it all, there was shareholder outrage at Gent's multi-million-pound pay package.

But the end result is that Vodafone's operations generate healthy cashflow, have 130 million subscribers and a brand that is recognised globally. As bad memories of the telecoms wreck begin to fade, Gent's reputation is reasonably well intact.

For Vodafone New Zealand, which posted a $90 million profit earlier in the year and has 53 per cent of the market, Gent has nothing but praise.

" ... We were David attacking Goliath, now we're the Goliath, but the key thing is not to think like one."

The next emerging trend in the business of mobile is what Gent calls fixed-to-mobile substitution - replacing landline telephones with mobile handsets. The concept relies on mobile pricing dropping significantly to lure customers off monthly line rentals - something incumbents like Telecom and Telstra find hard to stomach.

"It's tough, because they're eating their own lunch and we're also going to eat it for them."

For his successor, Arun Sarin, success at a post-Gent Vodafone could come down to the timing of that fixed-line substitution. With intermediary 2.5G networks in place, Vodafone faced the challenge of overlaying them with high-speed upgrades.

"That is difficult to do. We haven't yet got to a state of reliability that says commercially we're confident about launching this on the market," said Gent.

He predicts network handover issues will be sorted out by the middle of next year, by which time dual-mode handsets, which contain chip-sets supporting various mobile standards, will be in good supply.

The most exciting future developments for mobile, says Gent, is the explosion in use in economies like China, where new mobile subscriptions have reached as high as five million a month.

Vodafone was eyeing up the Nigerian market, while operating in infrastructure-lacking countries like the Congo posed its own problems.

"One guy has a tree in the middle of the jungle which has a platform where you can just about get a mobile signal. He's charging people to go up the tree to get a signal from our nearest [cell site]," said Gent.

A good part of Vodafone's success under Gent had come down to clever marketing and strategic sponsorships, not all of which he was initially enthusiastic about.

"I was actually against the Manchester United sponsorship, because it's very tribal. We had 1500 people cancel their contracts."

In the end, he let his Vodafone UK go through with the deal when they convinced him the sponsorship would have impact globally. Vodafone subsequently rode on the coat tails of David Beckham as he became an international super-star.

Entering a "new phase of life", Gent is looking for his next big challenge.

In the meantime he has signed on as the first non-American board member of investment bank Lehman Brothers and is working with Reform, a Government think-tank which is looking at ways of running public services in Britain more effectively. There are also two boys aged two and four to bring up, a factor that has seen Gent trade early morning board meetings for school runs.

Vodafone under Gent

* 1985: Makes its first mobile call, Gent joins to run UK network.

* 1988: Vodafone shares publicly listed.

* 1999: Buys US operator AirTouch in a £36 billion deal.

* 2000: Pays £6 billion for 3G spectrum in the UK.

* 2001: Acquires German company Mannesman for £112 billion in a hard fought hostile takeover.

* 2002: Vodafone reports record UK loss of £13.5 billion, hit by massive writedowns.