The urbane Colao will be replaced by Nick Read, finance director since 2014, whose broad global experience had marked him out as the likely next leader of a group with 536 million mobile customers and 47 billion euros ($56 billion) in revenue.
Read was appointed CFO and joined the Vodafone board in April 2014.
Vodafone group chairman Gerard Kleisterlee said: "I would like to express our gratitude to Vittorio for an outstanding tenure".
Mr Kleisterlee added: "Nick has been the co-architect of the group's strategy together with Vittorio, combining extensive global operational and commercial leadership with world-class financial acumen". Margherita has a strong track record in financial leadership at the highest levels, and I am delighted to welcome her to the Board.
Vodafone Group CEO Vittorio Colao said at a web conference that both the companies have already starting branding exercise for the new entity.
Vodafone shares dropped as much as 4.8% and were down 2.9% to 201.10 pence as of 11:31 am in London.
Read joined Vodafone in 2001 as Vodafone UK Finance Director before being appointed Vodafone UK Chief Commercial Officer then Vodafone UK Chief Executive.
Some 15000 Palestinian rioters in Gaza descended on border with Israel
Holding Palestinian flags and banners, the protesters were chanting "Free Palestine", "Freedom Now" and "End Occupation" slogans. The demonstrations have been organized by Gaza's Hamas rulers, but are fuelled by despair among the territory's 2 million people.
After all, medium-term financial results are only part of corporate success, with vision and strategy providing an equally (some say more) important other side of the coin.
Data traffic on network of Vodafone India increased four fold but the company could not reap financial benefits because of sharp decline in data prices.
Excluding the negative impact of net roaming declines in Europe, the benefits of settlements in the United Kingdom and Germany and the introduction of handset financing in the United Kingdom, organic adjusted EBITDA grew by 7.9%.
"Now is the right time to begin the transition", Colao said on a call with reporters.
The net debt of Vodafone India stood at 58,119 crore or 7.7 billion euro at the end of the period, down from Rs 64,014 crore (8.7 billion euro) at the end of the prior financial year due to the positive translation impact of closing foreign exchange rates on the debt balance of 1.2 billion euro and proceeds of Rs 3,850 crore from the sale of Vodafone India's standalone towers to American Tower Corporation.
"I think now is the time to really focus on our organic plan, really focusing on digital transformation of our business and the customer experience".