British telecom giant Vodafone confirmed Friday it has finalized steps to sell the entirety of its Italian operations to Bern-based Swisscom AG in a deal worth $8.7 billion. File Photo by Tolga Akmen/EPA-EFE
March 15 (UPI) — British telecom giant Vodafone confirmed Friday it has finalized steps to sell the entirety of its Italian operations to Bern-based Swisscom AG in a multibillion-dollar deal.
The sale became necessary, as remaining in Italy would never achieve a return on capital employed in excess of cost of capital, the company said in a statement Friday.
The ROCE measure is used to compare a company’s profitability while also taking into account the amount of capital used.
The deal will generate $8.7 billion (€12 billion) in immediate cash proceeds for Vodafone, which announced last May it would begin overhauling the entirety of its European operations.
Shortly after that announcement, in June of 2023, the company announced a merger with Hong Kong-based Hutchison 3G Enterprises. The move created Britain’s largest cell phone operator with 27 million customers.
In October, Vodafone finalized the sale of its operations in Spain to London-based Zegona Communications in a deal worth up to $5.45 billion (€5 billion).
Vodafone will now commit up to $4.35 billion (€4 billion) in share buybacks using proceeds from the latest sale as well as the deal with Zegona “as part of our broader capital allocation review,” the company said Friday.
The firm will continue shifting its focus to existing operations in Europe in growing markets where it already has a firm footprint and which have “good local scale.”
It will also continue growing its 5G footprint across Britain and its other remaining markets.
“Today, I am announcing the third and final step in the reshaping of our European operations. 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,” Vodafone Group Chief Executive Margherita Della Valle said in the company’s statement.
“The sale of Vodafone Italy to Swisscom creates significant value for Vodafone and ensures the business maintains its leading position in Italy, which has been built through the dedicated commitment of our colleagues to serving our customers over many years.”
