An upwardly mobile pioneer

PROFILE SIR GERALS WHENT Vodafone's chief is still selling the cellular message at 69, but as the market maturesWilliam Kay finds him heading towards the exit profile

AN "upwards profit warning" is how Sir Gerald Whent, chief executive of Vodafone Group, now describes his recent surprise statement that an "exceptional increase in subscribers" would improve next year's profits, while reducing this year's "below current market expectations".

The declaration came as a surprise to a stock market audience that had become used to continuous profit increases, no questions asked. Because only the true aficionados normally queried anything, few ordinary investors were in a position to understand the nuances of what Sir Gerald was saying.

He explained: "It is something that is happening in the market place. It is just simple mathematics. You don't have to have a PhD to understand it and, as soon as the market understood it, the shares came back up."

The "it" Sir Gerald was referring to was the sales commission structure of mobile phones, which, judging by the stock market's instant reaction, had until then been a closed book to most professional investors. The Vodafone share price, which has been zigzagging for several months after two years of rocketing growth, plunged by a tenth, as the market struggled to divine the drift of Sir Gerald's message.

Basically, as with life insurance, the commissions paid on mobile phone sales temporarily wipe out the profit. In the case of the phones, that profit comes through as call charges mount.

So Sir Gerald was signalling that there would be a strong increase in profits in the year to March 1996, but the sales commissions mean that the current year's profit will be more subdued. The analysts have taken that to mean only a marginal improvement in last year's £363m profit, but a jump to as much as £520m next year.

The shares steadied as fund managers digested this, and then largely recouped losses when US investors weighed in to take advantage of the dip. At 191p, they are now higher than when Sir Gerald made his statement. But he concedes that the game is changing. The mobile phone market is moving beyond its initial base of travelling business people to private users.

"It doesn't mean they're not jolly good customers, they are, but they're people who have telephones in their car for emergencies," said Sir Gerald. "Some ladies only take them out with them once a week, so they don't make a lot of calls." The result is that the average annual charge has come down from more than £700 to £550 and is going to go considerably lower than that.

"We are still getting tremendous growth," Sir Gerald insisted, "but it is lower margin."

As the Vodafone share price seems to be indicating, that means that the mobile phone market is moving from boom to maturity, with all that that implies in terms of aiming the sales message at the impulse gossiper rather than the high-pressure executive. Such a cultural switch will require a very different outlook and, arguably, different talents.

So, after largely fathering the mobile phone market in Britain, Sir Gerald, who turns 68 next month, is beginning to gauge the right time for his exit. "I want to leave Vodafone in a position to be making annual profits of £1bn by the year 2000," he admitted, "but I shall be long gone by then." Quite when, he has not resolved,and when he does he will first impart his decision to his co-directors.

Sir Gerald tries to give the impression of having had everything under control throughout his career - even his becoming Vodafone's chief executive, although he has inevitably had to bend the knee to the formidable Sir Ernest Harrison, in effect the founder of Racal Electronics, Vodafone's progenitor.

That was never more apparent than 26 years ago, in 1969, when Racal bought Controls and Communications, an electronics company where Sir Gerald was close to making his way to the top job.

Like any executive whose company is taken over, he had to endure a period of considerable uncertainty, but he brushes it off.

"I always knew I'd be running a company within the group," he recalled matter-of-factly. "I was destined to be so. I was almost there when they took us over - in fact, I was weeks away from it. But I took over Racal's biggest group, of many companies which I ran before we started this. I was labelled as a future MD."

Although Sir Gerald admitted to "a year's hiccup" while Sir Ernest sized him up along with the other managerial talent he had acquired with Controls and Communications, he is philosophical about the uncertainty that hundreds of executives undergo every year when their companies change hands over their heads.

"That's life," he said. "When you get taken over, you know, all promises are gone, nothing counts. You have three choices: you can leave and seek pastures new, you can stay very proud and take a five-year delay in your career - or you can join the opposition, as the people are who take you over. I joined the opposition. I quickly began to move on again, and possibly got my own company faster than I would have if there hadn't been an acquisition."

When he refers to his "own company", Sir Gerald is still talking in the context of the Racal empire. But Sir Ernest has paid tribute to his lieutenant's determination and ambition.

Sir Gerald has spent most of his life fighting his corner. He was born into an army family in India. He was the fourth child, runt of the litter, who was packed off to boarding-school at the age of 11 while his father went to war.

That was where he learnt his love of sport, becoming soccer captain while he scraped through his school certificate - a broad- based and tougher version of GCSE. "I was not very bright," he recalled, "but I was always leader of the gang."

While his brothers followed in their father's footsteps and rose to be colonels, Gerald quit the military life as soon as he completed his national service, and became a management trainee with Dent Allcroft, a glove maker. With possibly a dash of hindsight, he claimed to see the glove business being swamped by cheap Asian imports, so in 1962 he headed for Plessey, a trailblazer for the then fledgling electronics industry.

He also takes the credit for ushering Racal into mobile phones, firstly setting up Racal Telecom, then spinning it off as a separately quoted company renamed Vodafone.

"At one time, there was only me in this company," Sir Gerald pointed out. "As I was going to spend a fair amount of money, I did it with Ernie's blessing, but I was the prime mover."

Sir Gerald does not lay claim to any great vision of a future filled with folk walking up and down the street jabbering on their mobiles - and occasionally getting mugged into the bargain. Instead, he saw manna from heaven.

"Look, there was a gift of government going," he pointed out. "When you've been fighting the roughest, toughest companies in the world, as I was in running Racal's radio group, the thought of a licensed duopoly wasn't at all bad, especially as the other supplier, BT, had been used to being a monopoly."

More recently, he has been spreading the mobile phone gospel to other parts of the world - 11 countries so far, with two more to come, concentrating on more loquacious regions.

"We're in Greece, where they tend to be verbose," Sir Gerald said, "and Hong Kong. The Chinese are of the same ilk as the Mediterraneans. They love to talk."

He has also taken Vodafone into South Africa, where the group is using radio telephony to produce a low-cost phone system for the townships.

If Sir Gerald has his way - and he usually does - he will be seeing a lot more of that part of the world in the next few years, as a globe-trotting rugby and cricket spectator, with some top-class horse racing thrown in.

"I shall just do more of what I do now," he explained. "Instead of watching one Five Nations rugby match a year, I shall watch five, 30 race meetings a year instead of 10 and so on. When you've been criticised all your life, it will be lovely to be a critic."

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Attenborough with the primates
tvWhy BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
News
Campbell: ‘Sometimes you have to be economical with the truth’
newsFormer spin doctor says MPs should study tactics of leading sports figures like José Mourinho
Sport
football
Life and Style
Agretti is often compared to its relative, samphire, though is closer in taste to spinach
food + drink
News
Kelly Osbourne will play a flight attendant in Sharknado 2
people
News
Down-to-earth: Winstone isn't one for considering his 'legacy'
people
News
The dress can be seen in different colours
i100
Sport
Wes Brown is sent-off
football
Voices
Lance Corporal Joshua Leakey VC
voicesBeware of imitations, but the words of the soldier awarded the Victoria Cross were the real thing, says DJ Taylor
Life and Style
Alexander McQueen's AW 2009/10 collection during Paris Fashion Week
fashionMeet the collaborators who helped create the late designer’s notorious spectacles
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: HR Benefits Manager

£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

Recruitment Genius: Office Manager / Financial Services

£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...

Jemma Gent: Year End Accountant

£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...

Jemma Gent: Management Accountant

£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...

Day In a Page

War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn
Yvette Cooper: We can't lose the election. There's too much on the line

Yvette Cooper: We can't lose the election. There's too much on the line

The shadow Home Secretary on fighting radical Islam, protecting children, and why anyone in Labour who's thinking beyond May must 'sort themselves out'
A bad week for the Greens: Leader Natalie Bennett's 'car crash' radio interview is followed by Brighton council's failure to set a budget due to infighting

It's not easy being Green

After a bad week in which its leader had a public meltdown and its only city council couldn't agree on a budget vote, what next for the alternative party? It's over to Caroline Lucas to find out
Gorillas nearly missed: BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter

Gorillas nearly missed

BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
Downton Abbey effect sees impoverished Italian nobles inspired to open their doors to paying guests for up to €650 a night

The Downton Abbey effect

Impoverished Italian nobles are opening their doors to paying guests, inspired by the TV drama
China's wild panda numbers have increased by 17% since 2003, new census reveals

China's wild panda numbers on the up

New census reveals 17% since 2003
Barbara Woodward: Britain's first female ambassador to China intends to forge strong links with the growing economic superpower

Our woman in Beijing builds a new relationship

Britain's first female ambassador to China intends to forge strong links with growing economic power
Courage is rare. True humility is even rarer. But the only British soldier to be awarded the Victoria Cross in Afghanistan has both

Courage is rare. True humility is even rarer

Beware of imitations, but the words of the soldier awarded the Victoria Cross were the real thing, says DJ Taylor
Alexander McQueen: The catwalk was a stage for the designer's astonishing and troubling vision

Alexander McQueen's astonishing vision

Ahead of a major retrospective, Alexander Fury talks to the collaborators who helped create the late designer's notorious spectacle
New BBC series savours half a century of food in Britain, from Vesta curries to nouvelle cuisine

Dinner through the decades

A new BBC series challenged Brandon Robshaw and his family to eat their way from the 1950s to the 1990s
Philippa Perry interview: The psychotherapist on McDonald's, fancy specs and meeting Grayson Perry on an evening course

Philippa Perry interview

The psychotherapist on McDonald's, fancy specs and meeting Grayson Perry on an evening course
Bill Granger recipes: Our chef recreates the exoticism of the Indonesian stir-fry

Bill Granger's Indonesian stir-fry recipes

Our chef was inspired by the south-east Asian cuisine he encountered as a teenager
Chelsea vs Tottenham: Harry Kane was at Wembley to see Spurs beat the Blues and win the Capital One Cup - now he's their great hope

Harry Kane interview

The striker was at Wembley to see Spurs beat the Blues and win the Capital One Cup - now he's their great hope
The Last Word: For the good of the game: why on earth don’t we leave Fifa?

Michael Calvin's Last Word

For the good of the game: why on earth don’t we leave Fifa?
HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

Scientists hail daily pill that protects against HIV infection

Breakthrough in battle against global scourge – but will the NHS pay for it?