WHEN Arun Sarin took over as chief executive of Vodafone three years ago, one of his first big decisions was to block a £1 billion acquisition of a Bulgarian mobile-phone company — a deal put forward by Vittorio Colao, the high-flying boss of the group’s southern European operations.

The move shocked and surprised Vodafone’s insiders. Colao, then 41, was regarded as the group’s golden boy, a favourite of former chief executive Sir Chris Gent, and widely seen as Sarin’s likely successor.

“It was rather astonishing that Arun should pull the rug from under Vittorio’s feet,” said one executive last week. At one of the first meetings of directors after Sarin took over, Colao had suffered a loss of face.

Within months, Colao had left Vodafone, resigning to join an Italian publishing company, RCS MediaGroup. Some former colleagues suggest Colao felt let down, and his relationship with Sarin had deteriorated.

In the ensuing two years, Sarin has endured many difficulties. His relationship with shareholders has been hurt by a weak share price that reflects fierce competition, a dismal performance in Japan, multi-billion-pound write-offs and the most extraordinary boardroom bust- up the City has seen in years.

Finally last week Vodafone announced what some claim is the best news it has had for ages — the return of Colao as chief executive of Vodafone’s European operations, the most mature and most challenged part of its business. When he arrives next month, he will have the additional title of deputy chief executive.

Vodafone was keen to stress that the decision to bring back Colao was taken by Sarin — and not by Sir John Bond, who recently replaced Lord MacLaurin as chairman.

A spokesman said: “Vittorio and Arun have known one another for a very, very long time, before we acquired Airtouch (the American mobile company). If there were tensions, they were not that serious for the very simple reason that they’ve stayed in touch with each other. There are people out there determined not to give Arun credit for anything.”

Yet many commentators and analysts saw in Colao’s appointment a move by Bond to line up Sarin’s replacement. Sarin is unlikely to have been enthused by MacLaurin’s comment that he was “thrilled” to see Colao return as “a potential leader”.

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