"Losses continued in India as service revenue declined 18.7 per cent as a result of intense price competition from the new entrant, aggressive competitor responses and a significant reduction in MTRs (mobile termination rates)", Vodafone said.
Mr Colao, 56, leaves the world's second-largest mobile carrier in October and chief financial officer Nick Read, 53, will take over, Vodafone said in a surprise statement as it reported earnings that beat estimates.
Vodafone group chairman Gerard Kleisterlee said: "I would like to express our gratitude to Vittorio for an outstanding tenure".
Read, who was previously the Group's Chief Executive for the Africa, Middle East and Asia Pacific region, joined the Vodafone Group board in April 2014.
"Vodafone and Idea have agreed on a joint branding policy, in that the architecture is ready and commercial planning for the joint brand will start once we have all regulatory approvals for the merger", Vodafone Group Chief Executive Officer Vittorio Colao said on an earnings call on Tuesday.
Read's deputy since 2015, Margherita Della Valle will replace him as finance director. Vittorio will leave as his legacy a company of great integrity with strong inclusive values that is exceptionally well-positioned for the...
The announcement came as the company reported a 1.4pc rise in organic service revenue for its fourth quarter, beating analyst forecasts of a 1.1pc rise.
He also added saying, "After 10 years of stability under Colao, Vodafone is potentially setting sail into uncharted waters". Groupwide revenues dipped 2.2% to €46.6bn (£40.99bn), due in part to the December 2016 deconsolidation of its Dutch business and in part to foreign currency movements.
Commenting on the results, Colao said: "This was a year of significant operational and strategic achievement and strong financial performance".
"On March 20, 2017, Vodafone announced an agreement to combine its subsidiary, Vodafone India (excluding its 42 per cent stake in Indus Towers), with Idea Cellular".
"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".