Vittorio Colao, who is to succeed Arun Sarin as chief executive of Vodafone, pledged yesterday that the world’s largest mobile operator will continue its push deeper into emerging markets despite signs that growth is tailing off.

The Italian, who is currently deputy chief executive, will face a tough job to maintain growth when he takes charge at the end of July. Mr Sarin’s controversial strategy to seek growth in emerging markets prompted shareholders to call for him to quit just two years ago.

Yesterday’s full-year results appeared to vindicate Mr Sarin’s plan, but the future of the mobile industry in emerging countries looks increasingly uncertain. Although Vodafone’s revenue in emerging markets rose a healthy 22 per cent, it was driven by recent acquisitions in India and Turkey. Excluding those two markets, growth was 14.5 per cent, down from 21 per cent the previous year.

Organic revenue growth in Egypt fell from 41 per cent in 2006-07 to 29.9 per cent. In Romania it fell 8 percentage points and in the Czech Republic slowed from 9.7 per cent to 4.2 per cent. Even the Turkish market is getting tougher, with growth slowing towards the end of the year, resulting in a fall from 37 per cent to 24 per cent.

Mr Sarin said the group would now look towards Africa and Asia to continue its growth. He said: “This is one of the reasons we keep doing an India or a Turkey . . . There are many opportunities in Africa and Asia that we can get at reasonable prices meeting our financial criteria.”

Vodafone bought a controlling stake in Hutchison Essar last year for £5.7 billion and acquired Telsim Mobil, the Turkish wireless operator, for $4.6 billion (£2.3 billion) in 2006.

Vodafone is also looking to invest in China, where it has a 3.3 per cent stake in China Mobile, currently worth about $10 billion. Mr Sarin said that Vodafone wants to acquire control of Vodacom, the South African wireless market leader, in which it has a 50 per cent stake, and use the company as a springboard to buy other operators.

Entry into relatively untapped areas has seen the group’s customer base almost double from 133 million in March 2004 to 260 million now.

Andy Halford, Vodafone’s chief financial officer, said: “As penetration is rising, so the growth comes off.” He added: “There are only one or two exceptions that haven’t come down.”

Like Europe, Australia, New Zea-land and the Czech Republic have reached 100 per cent saturation, Mr Halford said. In Europe, earnings are slowing, despite talk that consumers are turning to internet surfing on their mobiles. Mr Sarin said that margins in Europe would continue to contract next year.

EU regulators are set to cut fees that operators charge for connecting customers from landlines and other mobile networks – known as mobile termination rates – and Vodafone will be most exposed of the mobile operators to this change, with 12 per cent of its European underlying earnings and a fifth of its free cashflow in Europe coming from these fees, according to Morgan Stanley analysis.

However, record full-year operating profits of £10 billion and pretax profits of £9 billion mean that Indian-born Mr Sarin, who is 53, leaves Vodafone on a high. He has gradually regained investors’ confidence after the shares plunged to 110p in 2006.

Investment in emerging markets has begun to show results and the company’s stake in Verizon Wireless in the US has more than doubled in value.

Richard Hunter, of Hargreaves Lansdown Stockbrokers, said: “Having surmounted problems one by one, the chief executive has now decided to quit while ahead.”

Mr Sarin said: “It feels like the decisions we’ve done have come good.”

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