"While the succession news may have caught the markets off-guard, it appears to be an orderly change within the group", Accendo Markets analyst Artjom Hatsaturjants said as Vodafone's share price dropped 2.6 percent in London morning deals.
The announcement came as Vodafone reported an annual profit of €2.8bn (£2.5bn), compared with a loss of €6.1bn past year when it wrote down the value of its Indian business. Colao was appointed CEO in July 2008.
Total revenue for the year ended March 31 was down 2.2% to EUR46.57 billion, "primarily due to the deconsolidation of Vodafone Netherlands and FX movements".
Meanwhile, at the date of Vodafone's AGM on July 27, deputy CFO Margherita Della Valle will succeed Read and join the board, and Read will become group chief executive-designate. It also comes ahead of the merger of its struggling Indian business with Idea Cellular, a deal that is expected to close in June.
After 10 years of stability under Colao, Vodafone is potentially setting sail into uncharted waters under the guidance of an executive that has been with the company only 4 years and has less top level experience than the markets would have been fully comfortable with.
The reduction in mobile termination rates added to the woes of the company.
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There doesn't seem to be any juicy gossip behind the move, he has presumably just chose to spend more time with his cash, having spent a decade in charge.
Colao, who will leave his post later this year, has helped Vodafone survive challenges in the European market, transforming it from a pure-play mobile provider into a firm focused on converged networks thanks to the multi-billion "Project Spring" network investment programme and the construction and acquisitions of superfast broadband networks.
Vodafone's earnings announcement on Thursday pointed to other challenges ahead for Read, as the company battles low-end price competition in Spain and prepares for the entry of Iliad's discount carrier in Italy. As a result, underlying EBITDA grew 7.9%.
"It really is an opportunity to elevate what we offer for our customers", Read said to reporters.
For Colao, what life after Vodafone will look like hasn't been decided, he said.
He added he would be working flat out until his departure in October, but that he had no plans after that.