Vodafone Group Plc has reached an agreement to sell its Italian Business to Swisscom AG for €8 billion ($8.7 billion) in cash. In a move to streamline operations and boost its lagging share price, Vodafone also plans to buy back €4 billion in stock.
Swisscom will merge Vodafone Italia with its Fastweb SpA Italy subsidiary, with the deal set to close in the first quarter of 2025. The Swiss government, as the controlling shareholder in Swisscom, has expressed its support for the deal.
Vodafone’s Chief Executive Officer, Margherita Della Valle, has been under pressure to sell or merge underperforming units as the company’s share price declines. The sale of Vodafone Italia marks the final step in the reshaping of the company’s European operations, with a focus on growing telco markets where Vodafone holds strong positions.
The combined sales of Vodafone Italia and Fastweb total about €7 billion annually, making them the second- and fourth-largest operators in Italy. This sale will allow Vodafone to concentrate on its core markets in Germany and the UK.
Swisscom successfully fended off a rival bid from French billionaire Xavier Niel’s Iliad SA. Iliad’s entry into the Italian market in 2018 with budget-friendly mobile plans sparked a price war, prompting Vodafone to reject a merger proposal from the company.
Analysts believe that a deal with Iliad may have been preferable due to the competitive threat still posed by Niel’s company. The combination of Fastweb and Vodafone in Italy is expected to generate synergies for investors but may have little impact on competitive dynamics.
In securing this deal, Swisscom received financial advising from Evercore Inc., Deutsche Bank AG, and JPMorgan Chase & Co., while Vodafone was advised by UBS Group AG.
The sale of Vodafone Italia marks a significant shift in the telecom industry landscape in Italy, with implications for competition and market dynamics. As Vodafone continues to realign its operations, investors will be closely watching the impact of this deal on the company’s growth trajectory.
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