Vittorio Colao did a swift handbrake turn when he took over at the wheel of Vodafone a year ago. And a good job, too. Had he continued on the previous path — concentrating on growth in emerging markets — the company would be heading downhill fast now.

Instead, Mr Colao switched attention to costs, which has proved the right direction as stiff competition has spread from mature developed countries into fast-growing markets such as India.

There are about to be two new entrants in India, taking the total number of operators to twelve, and a vicious price war has already broken out. Vodafone signed an astonishing 14 million new customers but revenue grew by only a fifth in the six months to September as margins came under pressure. In Europe, revenue fell 4.5 per cent, dragged down by slowing economies and fierce competition. And that was despite a 17.8 per cent rise in data traffic, as mobile internet usage finally starts to take off.

But thanks to cost-cutting, Vodafone managed to increase group operating profits by 2 per cent to £5.9 billion, on revenue down 3 per cent excluding acquisitions.

Like BP, cost control has never been at the top of Vodafone’s corporate priority list. And once you start looking seriously, it is amazing how much more you can find to cut.

Mr Colao said his £1 billion cost-reduction plan would be achieved a year ahead of schedule and pledged to deliver another £1 billion by 2012, much of it coming from rationalising operations and purchasing across the group’s sprawling empire. Mr Colao has also delivered the promised focus on cashflow, while maintaining capital investment.

There were signs of improvement in some of its most difficult markets, including Spain and Turkey, and while it continues to struggle in the UK, at least after Christmas it will finally be able to offer the Apple iPhone, which has given rival O2 such a boost.

Vodafone still faces some real challenges. But Mr Colao seems to be getting to grips with everything he can control and the sluggish performance of the shares, which have a prospective yield of almost 6 per cent, looks overdone.

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