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Vodafone outlines €8 billion sale of its Italian business to Swisscom

The Vodafone logo on a dark red and black background

Vodafone has sold its Italian business, Vodafone Italy, to Swisscom for €8 billion as it seeks to focus on growing markets. The sale of Vodafone Italy follows the sale of Vodafone Spain and the merger of Vodafone UK with Three UK.

The company said that it will now focus its European operations on growing markets where it holds “strong positions and good local scale.” Of note for investors, the sale of Vodafone Italy and Vodafone Spain will lead to an increase of the return on capital employed (ROCE) by 1 percentage point, meaning the firm is getting more bang for its buck when it spends.

Commenting on the sale, Margherita Della Valle, Group Chief Executive and Vodafone Group, 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. This will be coupled with our acceleration in B2B, as we continue to take share in an expanding digital services market.

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.

Our transactions in Italy and Spain will deliver €12 billion of upfront cash proceeds and we intend to return €4 billion to shareholders via buybacks, as part of our broader capital allocation review.”

As part of the deal, Vodafone Group will continue to provide some services for up to five years to Swisscom. The latter firm will pay Vodafone for these services annually, with the first year expected to cost €350 million.

The two companies are also interested in exploring closer commercial ties that will see increased collaboration beyond Italy. Areas for cooperation could include IoT, enterprise services and solutions, procurement, operational shared services, and roaming.

The transaction needs to get regulatory approval, including the Italian Competition Authority.

Source: Vodafone

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