Market Watch

Vodafone Sells Italian Arm to Swisscom in Strategic Move

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In a notable development, Vodafone has agreed to sell its operations in Italy to Swisscom, the Swiss telecommunications giant, for €8 billion, marking a significant shift in its business strategy. This sale is part of a broader effort by Vodafone to restructure its operations across Europe, aiming for a stronger, more focused presence in growing markets.

The deal sees Vodafone Italy, a prominent player in the Italian telecommunications market, merging with Fastweb, a broadband operator in Italy owned by Swisscom. The acquisition price is based on Vodafone Italy’s forecasted operating free cash flow for the year, pegging the value at roughly 26 times this figure and 7.6 times its adjusted earnings before interest, taxes, depreciation, amortization, and leases (EBITDAaL).

This move comes after Vodafone Italy was previously eyed by Iliad, which had its joint venture proposal—valuing Vodafone Italy at €10.45 billion—rejected. The proposed arrangement with Swisscom still awaits the green light from regulatory bodies, including the Italian Competition Authority, before it can be finalized.

Vodafone’s decision to offload its Italian business follows the earlier sale of its Spanish operations to Zegona Communications, a UK-based investment firm, for €5 billion. These divestitures are described by Vodafone as the final steps in a major overhaul of its European business strategy, designed to concentrate its efforts in markets where it has a strong presence and potential for growth.

Margherita Della Valle, Vodafone Group Chief Executive, highlighted the strategic importance of these transactions, underscoring the goal of creating value for shareholders and enhancing the company’s market position in Italy. The restructuring will also see Vodafone refocusing its efforts on the business-to-business (B2B) segment and digital services market.

In addition to the sale, Vodafone announced a reorganization of its executive and operational structures, aiming for greater efficiency and focus on key markets. This includes the formation of five new business divisions and several high-profile executive appointments and departures, signaling a fresh direction for the company.

As Vodafone continues to navigate through these changes, the telecommunications industry watches closely, particularly with regard to Vodafone’s potential merger with Three in the UK, which is still pending approval. This series of strategic moves illustrates Vodafone’s commitment to revitalizing its operations and positioning itself for sustainable growth in the competitive telecommunications sector.

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