Bahrain, also a McLaren co-owner through the state-owned Mumtalakat Holding Company, has been a controversial race on the F1 calendar in the wake of the Kingdom's reaction to the Arab Spring uprising.
Vodafone's chief commercial officer Morten Lundal insists the decision to quit is simply because the brand has "less need for this kind of exposure in future".
But The Times claims Vodafone "has been reconsidering its involvement with formula one" since grands prix have been going ahead "despite a violent uprising in (Bahrain) in which thousands of anti-government protesters confronted police".
The report continued: "Corporate sponsors such as Vodafone pulled their hospitality plans but could do little to press for the removal of their branding from the cars because of the structure of sponsorship deals.
"Vodafone was particularly sensitive to events during the Arab Spring after it was forced by armed forces to shut down its network in Egypt in January 2011 and send out a text message on behalf of the Mubarak government to 'confront the traitors and criminals'."
Mexican billionaire Carlos Slim's Telmex company is the favourite to replace Vodafone at McLaren next year, but The Times said new F1 sponsors Rolex and Emirates are also in the running.
"It's not cut and dried," said a team source.