VODAFONE, the beleaguered mobile giant, bowed to investor pressure last night, announcing the sale of its failing Japanese division for up to £8 billion.

The proposed sale of the Vodafone KK business to SoftBank, the Japanese internet giant, sent shares in Vodafone surging, adding £5.6 billion to its stock market value.

Investors, upset with the disappointing performance of the company, had called for Vodafone, among other things, to give up on its failing Japanese business — its Achilles’ heel.

The move to sell the business, which accounts for 20 per cent of Vodafone’s revenues, was also hailed as a landmark move marking the end of the group’s empire-building strategy. A successful sale would mark the first major sell-off by the group in its history.

Sources close to the matter said that the two companies were in the final stages of talks and a deal could be reached as early as this month. Vodafone said that the talks may or may not lead to a deal, and a further announcement would be made in due course.

Once an unstoppable growth machine, Vodafone has come under huge pressure from investors to revive its fortunes after a disappointing share-price performance. Recently it saw its share price hit a three-year low after a series of warnings on slowing growth and other negative announcements, including a potential £5 billion tax bill.

Analysts said yesterday that the move to sell the Japanese operation could help to ease pressure on the group and stem the pressure on Arun Sarin, its chief executive. Pressure from investors, combined with an internal whispering campaign at the company, had left some City insiders convinced that he would be gone within the year.

However, last night one leading shareholder in the group remained cautious. Far from erasing questions about the management, he said that the sudden volte face by the group — which had consistently said that it would not pull out of such an important technological market — raised further questions about it.

One investor said: “The key concern with Vodafone is its long period of underperformance . . . and the company takes its lead from the top.”

Vodafone had been in talks with SoftBank about a deal in which the internet player would use its network. However, the talks progressed beyond that to a proposed deal in which SoftBank would take a majority stake — thought to be well over 50 per cent — in the company.

Despite consistent efforts to turn around the fortunes of the Japanese division, over the past year its customer base has shrunk and it has remained a distant third behind NTT DoCoMo and KDDI.

Vodafone had been reluctant to pull out of a market that has acted as a technological test-bed and only last November Bill Morrow, the British executive sent to turn around the business, said that it was on the road to recovery.

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