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Last updated: November 17, 2005 7:23 pm

Vodafone chief apologises to investors

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Arun Sarin, chief executive of Vodafone, on Thursday apologised to investors for the mobile operator’s failure this week to communicate some of the financial information he felt contributed to the worst slump in the company’s share price in seven years.

The shares of the world’s largest mobile operator by revenues are still in the doldrums after falling almost 11 per cent on Tuesday, when the group revealed that margins would fall next year because of increased spending at its Japanese unit and intensifying competition in Europe.

Vodafone believes investor confidence was further undermined by the group’s disclosure that it expected to see £5bn ($8.6bn) in tax liabilities crystallise in the next three years. Mr Sarin, addressing investors at a Morgan Stanley conference in Barcelona, admitted that guidance on the tax issue could have been better: “Maybe the messaging wasn’t good and for that I take responsibility.”

Analysts’ opinion was split on the reason for the sharp drop, with some saying it was Vodafone’s decision to commit so much to the future of Japan that really upset the market.

Mr Sarin was more reluctant to accept that the extra investment in Japan came as a surprise. “All this stuff was out in the market. If the market didn’t get it, then there is a disconnect. I am the CEO and if you didn’t understand it then I am sorry,” he told the FT on the fringes of the conference.

Mr Sarin instead sought to reassure the market over his Japanese strategy. “The Japanese company is going to be just fine in the next 18 to 24 months,” he said, repeating his assertion that the recovery programme was ahead of schedule. He told his audience that, fundamentally, nothing had changed at Vodafone overall to cast it in a negative light. “I just want to reassure all our investors our company is just as strong today as it was a week ago.”

Shares in Vodafone slipped 0.8 per cent to 127.75p.

Mr Sarin was not alone in seeking to placate investors. Michel Combes, executive vice-president of France Télécom, issued a guarded apology after the operator cut its full-year sales guidance for the year late last month to below its target of 3-5 per cent growth for the year. He told the same conference he would “try to do better” to make sure there was a better understanding with shareholders because “you are right and we were wrong”.

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