Vodafone to sell Italian arm to Swisscom in €8 billion deal

The logo for the Vodafone brand on one of its retail stores in Berlin, Germany. Tuesday, Feb. 1, 2022.
The logo for the Vodafone brand on one of its retail stores in Berlin, Germany. Tuesday, Feb. 1, 2022. Copyright Michael Sohn/AP
By Eleanor Butler
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The mobile phone giant will offload Vodafone Italia in an effort to streamline operations and tackle sliding share prices.

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Vodafone has agreed to sell its Italian business to Bern-based telecommunications firm Swisscom for €8 billion in cash, according to a statement released on Friday.

Swisscom will merge Vodafone Italia with its existing business Fastweb to create Italy's second-biggest fixed-line broadband operator, behind TIM.

As part of the agreement, Vodafone has said it will return €4 billion to shareholders via stock buybacks, and cut its dividend to 4.5 cents a share from next year, down from 9 cents in 2024.

The deal is expected to be closed in the first quarter of 2025.

"Vodafone Italia and Fastweb will bring together complementary high-quality mobile and fixed infrastructures, competencies, and capabilities to create a leading converged challenger in a market with material growth opportunities," Swisscom said in a statement.

The sale comes after Vodafone turned down numerous offers from French telecoms company Iliad in late January.

Iliad had made a bid for the Italian branch that would have brought cash proceeds of €6.6 billion to Vodafone, and the subsidiary would have been split 50:50.

Offloading its Italian branch is part of Vodafone’s wider strategy to simplify operations and shed smaller divisions.

"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," said Chief Executive Margherita Della Valle.

Last year, the telecoms group sold its Spanish arm to Zegona Communications in a deal worth more than €5 billion.

Vodafone is also seeking to merge its domestic branch with Three UK mobile network, although the move is being stalled by competition regulators.

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