British telecommunications giant Vodafone announced on Friday that it has reached an agreement to sell its Italian division to Swisscom for eight billion euros ($8.7 billion), marking the culmination of efforts to restructure the UK company’s European activities.
Vodafone, which had previously turned down offers from French billionaire Xavier Niel’s Iliad group, has been implementing a cost-cutting strategy involving layoffs and divesting overseas divisions.
The UK firm stated its intention to distribute four billion euros to its shareholders following the divestment of its Italian and Spanish operations, amounting to a combined total of 12 billion euros.
Vodafone’s chief executive, Margherita Della Valle, described the deal with Swisscom as the “third and final step in the reshaping of our European operations.” She emphasized that the company’s future focus would be on thriving telecom markets where it holds robust positions, aiming for sustainable growth in Europe.
In a separate statement, Swisscom announced its plans to merge Vodafone Italia with its own Italian subsidiary, Fastweb.
“The industrial rationale behind this merger is exceptionally robust,” remarked Swisscom CEO Christoph Aeschlimann. “Fastweb and Vodafone Italia complement each other perfectly, creating significant value for all stakeholders.”
Last month, Vodafone and Swisscom had disclosed that they were in advanced discussions regarding the transaction.
Earlier this year, Vodafone turned down a proposition from Iliad to merge their Italian operations, with the deal valuing Vodafone Italy at 10.45 billion euros. This rejection followed Vodafone’s dismissal of an 11.25-billion-euro bid from Iliad and private equity firm Apax Partners in February 2022.
Niel has recently acquired a 2.5-percent stake in Vodafone. According to a source familiar with the matter, Vodafone showed a preference for a deal with the Swiss entity due to its “significant cash component” and higher probability of completion, given the likelihood of approval by Italian regulators.
Della Valle disclosed the sale of Vodafone’s Spanish division to investment fund Zegona for a sum of up to five billion euros. This move followed her earlier decision to eliminate 11,000 positions, representing over 10 percent of Vodafone’s global workforce, in a bid to reduce expenses.
Meanwhile, the UK’s competition authority is conducting an inquiry into Vodafone’s proposal to merge its British mobile operations with those of Three UK, which is owned by Hong Kong-based CK Hutchison.
Additionally, Vodafone concluded the sale of its Hungarian subsidiary last year.
