Vodafone bolsters its board with return of Colao

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Vodafone moved to strengthen its management team yesterday by welcoming back Vittorio Colao to take charge of its European operations two years after he left the telecoms giant for the Italian media group RCS.

The company also named Mr Colao as deputy chief executive, in effect anointing him heir apparent for Arun Sarin, Vodafone's chief executive.

The appointment fuelled speculation that Mr Colao could soon replace Mr Sarin. About 10 per cent of investors voted against Mr Sarin's re-election as chief executive at the company's annual meeting in July with major shareholders such as Standard Life and Morley Fund Management holding him responsible for Vodafone's flagging growth prospects and a poor share price performance.

Mr Colao has previously indicated that he would be interested in the top job at Vodafone should it become available. He was passed over for the position in favour of Mr Sarin when Sir Christopher Gent stood down as chief executive in 2003 and left the company in 2004 to take charge of RCS MediaGroup, which owns the Italian newspaper Corriere della Sera.

Yet a move to replace Mr Sarin does not appear imminent, especially as the current chief executive was involved in rehiring the Italian. Mr Sarin said in a statement: "We have a number of major challenges and opportunities in our European region and I am confident that, given his background and experience, Vittorio is well equipped to succeed in this position."

Mr Colao, 44, replaces Bill Morrow who abruptly left the company in July after a decade with Vodafone so that he could return to his native California and keep his family together.

The Italian will also replace the departing Sir Julian Horn-Smith as deputy group chief executive.

Robert Grindle, an analyst with Dresdner Kleinwort, said: "Just as Bill Morrow would have been a strong succession candidate, so will Vittorio Colao. If the job came up he would definitely be in the running. However, he has a big job to do there and is no shoe-in."

Starting in October, Mr Calao will look to cut costs while stimulating revenue growth in mature markets across Europe including the UK, Germany and Italy. Vodafone has come under pressure in these markets due to intense competition and regulatory action.

It has identified mobile advertising and broadband as potential growth drivers. Mr Colao is considered an excellent candidate to deal with these challenges given his former position in charge of Vodafone's operations in southern Europe, the Middle East and Africa.

Vodafone was able to move swiftly to rehire the former McKinsey consultant after he quit RCS in July. He originally joined Vodafone in 2000 when the British company acquired the Italian mobile operator Omnitel, where he was the chief executive.