15 March 2024 , 08:50
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Vodafone has agreed to sell its Italian business to Switzerland's Swisscom for £6.8 billion.
The mobile phone giant plans to give back £3.4 billion to its shareholders through a buyback after the sale. This comes two weeks after the telecoms companies first confirmed they were in talks about a possible deal.
Vodafone, listed in London, said on Friday that this move is an "attractive valuation" and is the final step in its plan to sell off parts of its European portfolio. Swisscom will pay all cash for the deal, which will be fully financed by debt.
As part of the deal, Vodafone will continue to provide "certain services" to Swisscom for the next five years. Swisscom will pay annual charges of around £299 million. Vodafone also said that the two companies are looking at a closer commercial relationship to work together in many areas, not just Italy.
Margherita Della Valle, the boss of Vodafone, said: "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."
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"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."
Vodafone has already sold their businesses in Hungary and Ghana and are now looking at selling their Spanish part. They also want to merge with Three UK to make the biggest mobile phone network in Britain, worth £15 billion.
But the UK's competition watchdog is looking into the proposed deal because it wants to make sure the deal does not impact on consumer choice. Vodafone hopes the merger with Three UK will happen by the end of the year.
Vodafone is also planning to cut about 11,000 jobs in the next three years to make their business more streamlined. By January this year, they had already cut about a third of these jobs.