Vittorio Colao to take helm as U.K.-based mobile operator reports €6.66 billion annual net profit.
Arun Sarin presented Vodafone’s full-year financial results for the last time on Tuesday, as an essentially strong 2007-08 performance from the mobile operator was accompanied by the news that the chief executive will step down this summer. 

The U.K.-based global mobile giant posted a net profit of $6.66 billion for the year to 31 March 2008, compared with the £4.93 billion net loss, or loss attributable to equity shareholders, it reported a year ago. It also announced solid revenue growth, and positive guidance for the next few years.

But the numbers were easily overshadowed by the revelation that Sarin plans to leave the company following its 29 July AGM after a five-year stint at the helm, to be replaced by deputy CEO Vittorio Colao.

“I’ve done what I came here to do, and therefore I think the time is right and the time is now,” Sarin said at the results presentation.

“We are very well positioned strategically,” he added, noting that the company has transformed itself from a pure-play mobile operator into a “total communications” provider, and has boosted its portfolio of global assets with a series of strategic acquisitions.

“It has been a privilege to be chief executive in the last five years,” Sarin said. “The company is in very capable hands.”

46-year-old Colao has been Vodafone’s deputy CEO and chief executive, Europe since October 2006, when he returned to the company after a spell as CEO of Italian publishing group RCS. Prior to that he served as regional CEO, South Europe, Middle East and Africa under a previous Vodafone Group structure, having joined Voda from Omnitel Pronto Italia, now Vodafone Italy.

And if Tuesday’s results presentation is anything to go by, we are likely to see more of the same from Vodafone under Colao.

“For now, no change in strategy,” insisted Sarin, urging his audience not to confuse the role of the CEO with that of the board.

“The strategic process is fundamentally a board thing,” he said. “Vittorio… will look at all the facts and circumstances, and what is going on in the world, “and make his recommendations to the board, Sarin added.

Key to Sarin’s reign at Vodafone were the global acquisitions and disposals he managed: the operator’s proportionate customer base rose to 260 million as of the end of March during his five-year tenure from 120 million, driven largely by emerging market acquisitions, India and Turkey in particular.

The company plans to continue on the M&A trail, although insists it will take a measured approach to all opportunities.

“Our view on M&A hasn’t changed,” said Sarin, reiterating Vodafone’s interest in acquiring the whole of its Vodacom subsidiary in South Africa. “We’re interested in getting control… it requires others to play their respective parts,” he said.

“We’re interested in large markets in Africa and Asia,” added Vodafone’s EMAPA head Paul Donovan, adding that the operator is “waiting to see exactly how [the situation in China] plays out,” following the country’s recently-announced telecoms restructuring.

Sarin also dealt with questions about the company’s possible interest in Italian ISP Tiscali. “It’s not a must-have,” he said. If the assets come at a “sensible price… we’ll do it.”

The jewel in Sarin’s crown was undoubtedly the purchase of Indian mobile operator Hutchison Essar last year, now renamed Vodafone Essar.

The Indian operation has been contributing to group financials for the past 11 months, and is now recording pro forma revenue growth of above 50%, generates margins of around 33% despite increased spending, and is adding 1.5 million-1.6 million customers per month, Sarin said.

Vodafone Essar ended the financial year with 44 million subscribers, but the parent company is keen to see this figure rise to 100 million, and as such has earmarked significant investment for the business.

Vodafone has planned for “around $1 billion of capex for the next couple of years,” Sarin said. The company has recently received spectrum to allow it to build out the Spacetel business in seven new circles, but “we will need more spectrum,” to boost the Indian business to 100 million customers, Sarin admitted.

In addition, “3G may come to India within the next 12 months,” he said.

India forms part of Vodafone’s fast-growing EMAPA business group, which covers Eastern Europe, the Middle East, Africa, Asia and the Pacific. EMAPA reported revenue growth of 45.1% in the year to 31 March, although its EBITDA margin declined to 33.7% from 34.9% due to investment in expanding the customer base and the Indian and Turkish acquisitions.

EMAPA accounted for £9.35 billion of Vodafone’s £35.5 billion group revenues, with the rest coming from Western Europe. Total revenues were up 14.1% on-year, or organic growth of 4.2%, with much of the inorganic growth coming from India.

While group net profit of £6.66 billion represented a massive increase on the previous year, on an adjusted basis, net profit came in at £6.63 billion, up just under 7% from £6.21 billion. Adjusted operating profit rose 5.7% to £10.1 billion, while EBITDA was up 10.2% to £13.2 billion.

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