Surprise as Vodafone chief Sarin steps down

The 53-year-old head of the world's biggest mobile phone company said: "There is something inside you which tells you that it is time to hand over. It feels to me that I have done what I came here to do, which was build the company up and change its strategy. I'd rather say goodbye now while there is some momentum behind my successor's back."

He will be succeeded by his deputy Vittorio Colao, 46, brought back to Vodafone from his native Italy in October 2006. Previously he had worked for Omnitel, which became Vodafone Italy, for eight years from 1996.

The City welcomed today's succession along with better-than-expected annual figures and an upbeat view of the year ahead. Vodafone shares gained 3.55p to 166.85p.

Sarin, who joined the Vodafone board in 1999 and faced a concerted attempt to oust him two years ago, will not get a pay-off. He said: "I will get my salary and bonus entitlement for the first four months of this financial year."

Last year Sarin received £7.3 million in salary and share-based bonuses that included basic pay of £1.3 million and short-term bonuses of £1.9 million. He owns £12.4 million worth of Vodafone shares and is sitting on options worth several million. He has made some £40 million turning round Vodafone.

Colao's contract is unlikely to be revealed soon but should see a hefty boost to his basic £383,000 last year.

Sarin took over at Vodafone in 2003 after Sir Christopher Gent had spent $300 billion (£151 billion) on acquisitions to turn what had been a subsidiary of electronics group Racal into the world's largest mobile company.

Investors were worried that, under Gent, Vodafone had been on a spending spree at the top of the market. They wanted Sarin to tread carefully and concentrate on saving costs and making their assets sweat. They also wanted to see Vodafone paying decent dividends.

Today they got the results they wanted with an 11% dividend boost to 7.51p, a 60% payout of earnings.

As Sarin put it: "Today's numbers are ahead of our guidance and market expectations so I'm leaving on a high."

Headline earnings rose 10% to a record £13.2 billion on revenues up 14% at £35.5 billion for the year to March. And Vodafone forecast growth better than the City expected in the coming year with revenues between £39.8 billion and £40.7 billion and operating profit up from £10.1 billion to between £11 billion and £11.5 billion.

Sarin said that he had only decided to go "recently" and informed chairman Sir John Bond who had, after the obligatory search outside the company, had endorsed Colao's appointment.

Indian-born, US citizen Sarin said he would return to California after a sabbatical. "I want to goof off for a while and travel around the world," he said. "That's not like a chief executive flying hours for a half-day meeting, but hiking up mountains, lingering in art galleries and really getting to know places."