Arun Sarin will announce today that he is stepping down as chief executive of Vodafone after five years at the helm of the telecoms giant.

The Indian-born executive is to hand over the reins of the world’s biggest mobile phone company by market value to Vittorio Colao, who runs Vodafone’s European operations, in July.

Rumours over his resignation have circulated for the past year, reigniting a few weeks ago, with Mr Colao, his deputy chief executive, widely predicted to take his place.

However, the timing of Mr Sarin’s resignation will shock the City because he was seen as having proved his strategy two years after narrowly avoiding being ousted following a boardroom revolt.

At the time, institutional investors voted against his re-election to the board, accusing him of being too quick to spend millions of pounds on foreign acquisitions. By contrast, today the Vodafone chief is expected to announce record underlying full-year profits of about £13 billion.

The surge in Vodafone’s profits has been fuelled by the group’s expansion in emerging markets, particularly in India, thanks to last year’s acquisition of Hutchinson Essar there.

Analysts said that today’s results vindicated Mr Sarin’s position after the unrest two years ago.

Sources close to Mr Sarin, 53, believe that he could be eyeing a position in the world of private equity.

Mr Sarin, who replaced Sir Christopher Gent at the head of Vodafone in 2003, began his career in telecoms almost 25 years ago.

His career has included a stint with Pacific Telesis Group in San Francisco, after which he joined its subsidary AirTouch as chief operating officer.

When AirTouch was taken over by Vodafone, Mr Sarin became chief executive of the US and Asia-Pacific operations, also joining Vodafone’s main board. Mr Sarin was appointed chief executive of Vodafone at a time when the investment community wanted the company to concentrate on managing its businesses efficiently and returning cash to shareholders, after its dramatic takeover-driven expansion between 1999 and 2002.

After the group’s shares flatlined and fell by 1.5 per cent in 2006, they have risen 14.06 per cent to 163.3p in the past year, giving a market capitalisation of almost £87 billion.

As well as success in emerging markets, Mr Sarin has also seen revenues rise thanks to data. Last year revenues from this area — the downloading of music clips, e-mailing and so on — surged nearly 50 per cent in the first half to £1 billion. Data revenues now account for 7.3 per cent of the group’s total Western European revenues.

The improvement does little, however, to justify the £6 billion splashed out by the group on it 3G licence during frenzied bidding at the height of the dot-com boom.

However, analysts are unlikely to deny that Mr Sarin will go out on a high. During his five years he has turned around Vodafone’s prospects, giving an indication that consumers are finally banishing their reluctance to spend on more lucrative services instead of just calling and texting.

In the current environment the group’s diversified geographic portfolio and, critically, its exposure to markets outside the UK and the US are a big plus. Although a foothold in such markets does not come cheap — it spent $11.1 billion (£5.7 billion) for a 67 per cent stake in Hutchison Essar, India’s fourth-biggest mobile operator, last year — Vodafone has presented sound evidence of a good payback.

Recently Vodafone looked into buying MTN, the South African mobile phone operator, but backed out.

At the end of last year Vodafone’s £5 billion bid to extend its half share of Vodacom, another South African mobile operator collapsed. Telkom, with which it co-owns Vodacom, called off talks after several months.

Mr Sarin has also served as a director of Gap, the retailer, Charles Schwab and of Cisco Systems. In 2005 he was appointed a non-executive director of the Bank of England.

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