Rumour of Arun Sarin's resign lifts Vodafone

Rumour of Arun Sarin's resign lifts Vodafone

Vodafone shares led a rally on the FTSE, rising by 2.5% on Thursday, on rumours that CEO Arun Sarin may be leaving the company. The London market regained fresh highs above 6,700 on Thursday as mining stocks soared and amid departure rumours surrounding Mr Sarin.

"Today’s rumour surrounds Arun Sarin and the belief that he is about to resign,” said Lee Humphreys, head of European sales trading at E*Trade Securities in London, in an e-mailed comment.

"The market’s reaction would be favourable to such a move on the belief that it increases the likelihood of disposals, including Verizon Wireless.” Mark Pursey, a spokesman at Vodafone, said the speculation was not correct.

The market, however, seemed to welcome the rumour and Vodafone shares rose 4.3 pence to 175.3 pence at 10 am . Mr Sarin’s future at Vodafone has been uncertain since the summer of 2006, when a group of shareholders protested about underperforming shares and the perceived lack of ability by Mr Sarin to cope with the challenges facing the company. The revolt culminated with 15% of investors failing to back him at the 2006 summer annual meeting. “There’s talk that Sarin might be resigning and the market move suggests this is positive but we don't think this will help the company,” one trader said.

While media and analysts reports over the last few days, when Vodafone concluded a £537 million cash acquisition of broadband assets in Italy, were largely favourable, it seems as though traders are still not convinced about Mr Sarin’s strategy of acquisitions and a flurry of deals. Two years ago, Mr Sarin, then under pressure from investors, had to give assurances about going slow on acquisitions.