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Is Voda's Colao the new Gordon Brown?

Sarin jumped ship just in time?

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Come July Vodafone will have a new boss, one who has had his eyes on the top job for half a decade and has strong ideas on how the company should be run. But he takes over a company that has been expanding abroad while cutting costs at home - two strategies he's unlikely to be able to sustain in the long run.

Tony Blair will be remembered as the Prime Minister who jumped at just the right moment, leaving his deputy to take over the mess and, more importantly, to take the blame for it. Vittorio Colao takes over a company that has expanded about as far as it can into new markets, and is already cut to the bone at home, but is plagued by tireless shareholders who won't tolerate any change in strategy despite the lack of room to manoeuvre.

In 2003 Colao and Sarin competed for the job running Vodafone, and Colao lost. When Sarin was appointed Colao left the telecoms company to run an Italian media firm for a year or two, before falling out with shareholders and coming back into the fold in 2006.

At that time many thought he was being brought in to oust Sarin by the recently appointed Chairman Sir John Bond, forcing company representatives to assure shareholders that Sarin had personally approved the appointment.

Tuesday's resignation of Sarin caught some by surprise despite the fact that summer 2008 was the original schedule – five years after he took on the job. Most of us could see 45 million reasons he would want to hang on another 12 months, but even a mega bonus that big is probably not a priority to the man who made £17m selling AirTouch to Vodafone less than ten years ago.

Since taking over the company Sarin has expanded heavily into developing markets, investing in Turkey, the Czech Republic and Romania, and most notably in India. Vodafone has also divested itself of interests where it lacks a majority holding - where the company is unable to enforce its own business style, with the visible exception of Verizon.

Shareholders have repeatedly called on the company to get rid of Verizon, but Sarin always held firm. So far that obstinacy has paid off, despite the incompatibility between the networks.

Further expansion won't be easy for Vodafone - there aren't many worlds left to conquer - and while South America looks attractive there aren't so many bargains to be had these days. China is more interesting: Vodafone already has around three per cent of Chine Mobile and there is plenty of room for expansion, even if it would be expensive.

Cutting operating costs at home won't be easy either. Sarin has done most of the obvious pruning leaving little for Colao to do besides tidying up the edges.

So the new Vodafone boss will likely spend much of his time explaining all this to angry shareholders, who won't want to see the company's progress stalling despite the uncomfortable realities. When asked about plans the safe pair of hands was generic in response, saying that Vodafone will play an "increasing role in the Internet space... The big push is data, mobile data".

Gordon Brown is not entirely responsible for the state of the UK economy, he just inherited an unsustainable position. Colao has taken on much the same job but hopefully will do a better job of explaining that, and dealing with the consequences. ®

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