Vodafone in Advanced Talks to Sell Italian Business to Swisscom for €8 Billion

Italian mobile phone giant Vodafone has confirmed discussions to sell its Italian business to Swisscom, Switzerland’s leading telecommunications provider, in a deal valued at 8 billion euros (£6.8 billion).

Vodafone and Swisscom disclosed that they are in advanced exclusive negotiations, with the proposed agreed price on a cash basis, inclusive of debts. However, the full terms of the deal are yet to be finalized.

The potential transaction follows Vodafone’s extensive engagement with multiple parties to explore market consolidation in Italy. Vodafone stated that it believes this deal offers the optimal combination of value creation, upfront cash proceeds, and transaction certainty for its shareholders.

This development comes after Vodafone rebuffed efforts by France’s Iliad to merge their Italian businesses, a move that would have created the largest mobile phone company in Italy. Talks between Vodafone and Iliad were made public in December of last year.

The proposal from Iliad had valued Vodafone Italy at 10.45 billion euros (£8.9 billion) and Iliad Italy at 4.45 billion euros (£3.8 billion). As per the proposal, Vodafone would have acquired half of the share capital of the combined entity, in addition to a 6.5 billion euro (£5.6 billion) cash payment and a 2 billion euro (£1.7 billion) shareholder loan.

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Swisscom intends to merge Vodafone Italia with its existing business in Italy, known as Fastweb. The merging of these entities is anticipated to create a leading converged challenger by leveraging complementary high-quality mobile and fixed infrastructures, competencies, and capabilities.

According to Swisscom, the combined entity would benefit from increased scale, a more efficient cost structure, and significant synergy potential, ultimately unlocking value for all stakeholders involved.

In recent times, Vodafone has been strategically divesting parts of its business to free up cash and enhance its financial performance. Prior deals include the sale of its Hungarian and Ghanaian divisions, as well as efforts to sell off its Spanish arm.

The potential acquisition of Vodafone’s Italian business by Swisscom marks a significant development in the telecommunications industry, with implications for both companies and the broader market.

Source: UK Finance Yahoo