Vodafone’s Italian business sold to Swisscom for €8 billion

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In a significant move, Vodafone has agreed to sell its Italian business to Swisscom, the Bern-based telecommunications firm, for a staggering €8 billion in cash. The deal, announced on Friday, marks a strategic shift for Vodafone, as it aims to streamline operations and focus on core markets.

Swisscom plans to merge Vodafone Italia with its existing business Fastweb, creating Italy’s second-largest fixed-line broadband operator, behind TIM. This merger is expected to bring together complementary high-quality mobile and fixed infrastructures, competencies, and capabilities, establishing a leading converged challenger in the Italian market.

As part of the agreement, Vodafone intends to return €4 billion to shareholders through stock buybacks and reduce its dividend to 4.5 cents a share from next year, down from 9 cents in 2024. The deal is slated to be closed in the first quarter of 2025.

Vodafone’s decision to offload its Italian branch comes after rejecting several offers from French telecoms company Iliad in late January. Iliad had proposed a bid for the Italian branch, which would have brought cash proceeds of €6.6 billion to Vodafone, with the subsidiary split 50:50. This move is in line with Vodafone’s wider strategy to simplify operations and shed smaller divisions.

Looking ahead, Vodafone’s Chief Executive Margherita Della Valle emphasized the company’s focus on operating in growing telco markets, where it holds strong positions. This strategic realignment is expected to enable Vodafone to deliver predictable, stronger growth in Europe.

This sale follows Vodafone’s divestment of its Spanish arm to Zegona Communications last year in a deal worth more than €5 billion. Additionally, Vodafone is actively seeking to merge its domestic branch with the Three UK mobile network, although the move is facing hurdles from competition regulators.

The sale of Vodafone Italia to Swisscom underscores the dynamic nature of the telecom industry, where companies are constantly reevaluating their strategies to stay competitive in an evolving market landscape.

(Source: Business Euro News | Financial Times)

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