Vodafone also announced the resignation of Darryl Green, the chief executive of its Japanese businesses Vodafone Holdings KK and Vodafone KK, which together rank third in Japan.

Vodafone said Green, who will be temporarily replaced by its Asia Pacific CEO Brian Clark, had left "for personal reasons." But his departure comes as the Japanese unit struggles to find its footing in an increasingly cut-throat market.

"Vodafone HQ appears to have shot the messenger," said one Tokyo-based telecoms analyst. "Operating performance has been less than impressive over the last 12 months and the company has lost ground in terms of market share and handset innovation."

Clark will take over while Vodafone searches for a permanent replacement. Shareholders, who have worried about plunging operating profits in Japan, welcomed a move some said underlined Vodafone's commitment to turning around its key business in one of the world's most advanced mobile markets.

"Japan has been a concern... for some time and Vodafone has decided it is going to do something about it," said one.

Vodafone appointed David Jones as operating officer in Japan about six months ago to help revive operational performance.

The Japanese arm, formerly known as J-Phone, was once deemed an industry innovator as it became the first operator to offer photo e-mailing services and launch a high-resolution camera phone. It has recently struggled to remain competitive.

VODAFONE'S SHRINKING TOP FIVE

Colao's resignation marks the first departure among Vodafone's top five executive directors reporting to Chief Executive Arun Sarin, an Indian-born American citizen who was appointed last July. It will not be the last.

Finance Director Ken Hydon, on the board of directors since 1985, plans to retire next July. There has also been speculation that Operating Officer Julian Horn-Smith, who was passed over when Sarin took the top job, is seeking new pastures.

Colao will take up his new position on August 1 at RCS, whose publishing empire includes leading Italian newspaper Corriere della Sera. He replaces Maurizio Romiti, who bowed to shareholder pressure and quit on Monday.

"His arrival at RCS ... will bring to the media group experience and talent of the highest level," Italy's Communications Minister Maurizio Gasparri said.

(Additional reporting by Steve Slater in London and Rachel Sanderson in Rome) ($1=.5496 Pound)