Vodafone Group (VOD) has agreed to sell its Italian business to Swisscom (SCMN) for €8 billion (€6.8 billion) and will return half of the proceeds to shareholders.
The Newbury-headquartered telecommunications provider had confirmed in late February that it was in exclusive talks with its Bern-based peer to sell its Italy operations. It had previously turned down a merger proposal for the division from France’s Iliad SA (ILD).
The company now says it will receive €8 billion in cash up-front from Swisscom. It will return half of this to shareholders as a share buyback in the new financial year.
At the time of writing, shares in the company are up 4% on the news, to 68p.
However, Vodafone said it will rebase its annual dividend to 4.5 euro cents per share from the financial year 2025 onward, reducing it from the 9 euro cents currently on offer.
Vodafone’s financial year ends on March 31. It paid a 4.50 euro cents interim dividend for the current year and confirmed on Friday that the full-year payout for financial 2024 will stay at 9.00 cents.
Vodafone noted the Italian sale follows a similar disposal of its Spanish arm, raising €12 billion in total.
“Today, I am announcing the third and final step in the reshaping of our European operations,” chief executive Margherita Della Valle said.
“Going forward, our businesses will be operating in growing telco markets – where we hold strong positions – enabling us to deliver predictable, stronger growth in Europe.
“This will be coupled with our acceleration in B2B, as we continue to take share in an expanding digital services market.”
Swisscom said the acquisition will be fully debt-financed. It will combine Vodafone Italia with its own Italian subsidiary, Fastweb, which it had acquired in 2007. It expects to be able to achieve €600 million in annual run-rate cost savings from the combination of the two.
“The industrial logic of this merger is very strong,” said Swisscom CEO Christoph Aeschlimann.
“Fastweb and Vodafone Italia are an ideal fit to create high added value for all stakeholders.”
By Tom Waite, Alliance News editor
