Vodafone in talks to sell italian arm of business to Swisscom for £6.8 billion

28 February 2024 , 08:48

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Vodafone is in talks to sell the Italian arm of its business to Swisscom for £6.8 billion (Image: PA Archive/PA Images)

Vodafone is close to selling its business in Italy to Swisscom, a company from Switzerland.

The proposed £6.8 billion deal includes cash and debts, but details have still to be finalised. Vodafone said: "Vodafone has engaged extensively with several parties to explore market consolidation in Italy and believes this potential transaction delivers the best combination of value creation, upfront cash proceeds and transaction certainty for Vodafone shareholders."

Before this, Vodafone said no to a plan from Iliad, a French company, to join their Italian businesses together. This would have made the biggest mobile phone company in Italy. Vodafone and Iliad began talks about this proposal in December last year.

Iliad estimated Vodafone's Italian part of the business was worth £8.9 billion and valued their own part at £3.8 billion. If they had joined, Vodafone would have got half of the new company and also some money and a loan.

Swisscom wants to merge Vodafone Italia and its own company in Italy, called Fastweb. Swisscom said: "The planned merger of Vodafone Italia and Fastweb would bring together complementary high-quality mobile and fixed infrastructures, competencies, and capabilities to create a leading converged challenger."

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"The increased scale, more efficient cost structure and significant synergy potential would enable the combined entity to unlock value for all stakeholders." Vodafone has already generated cash by selling businesses in Hungary and Ghana.

Now, they're joining forces with Three UK to make the biggest mobile phone network in Britain, worth a huge £15 billion. The UK's competition watchdog is looking at the proposed deal because it might not be in the interests of consumers. Vodafone hopes they can finish joining with Three UK by the end of the year.

They're also planning to cut about 11,000 jobs in the next three years to make the company leaner. By January this year, they had already cut about a third of these jobs. In their latest update, Vodafone said they made 4.2% more money from around the world compared to last year.

But actual sales numbers went down by 2.3%. In the UK, service revenue went up by 5.2%, but in Germany, Vodafone's biggest market, service revenue only increased by 0.3%.

Lawrence Matheson