(Bloomberg) — Vodafone Group AG has agreed to sell its Italian operations to Swisscom AG for 8 billion euros ($8.7 billion) in cash and will buy back 4 billion euros in shares to streamline operations and boost performance. Announced. Stock prices lag.
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Swisscom plans to merge Vodafone Italia with its Fastweb SpA Italian subsidiary, with the deal expected to close in the first quarter of 2025, the companies announced in a statement on Friday, echoing an earlier report by Bloomberg. confirmed. The Swiss government, which is Swisscom's controlling shareholder, separately said it supported the deal.
Vodafone CEO Margherita Della Valle, who took the top job in April, has faced falling stock prices and pressure to sell or merge unprofitable divisions. That includes its Italian operations, which have struggled with intense competition and domestic consumer prices that are a fraction of what carriers can charge in other markets. Della Valle has also agreed to sell Vodafone Spain and plans to merge its UK operations with CK Hutchison Holdings.
In a statement, Della Valle called the sale “the final step in the restructuring of our European business.” “Our business operates in a growing telecommunications market, where we have a strong position and are positioned to deliver stronger and more predictable growth in Europe.”
Vodafone shares rose 3.6% to 68.45 pence in London trading at 8.13am, while Swisscom was little changed at 503.80 Swiss francs in Zurich.
Vodafone Italia and Fastweb are the second and fourth largest carriers in the country, respectively, with combined annual revenues of approximately €7 billion. Italy accounts for about 11% of Vodafone's sales, making it its largest market after Germany and the UK.
Swisscom fended off a rival bid from French billionaire Xavier Niel. Niel's Iliad SA launched into Italy in 2018 with his cheaper, no-frills mobile plans, sparking a price war. Vodafone had rejected Iliad's proposal to merge for 6.6 billion euros in cash. Telecommunications carriers across Europe have been forced into a tailspin after the European Union's competition watchdog implemented a strategy in which the big four compete in most markets, while the big three compete in less regulated countries like the United States. Suffering from a decline in investment returns.
Some analysts, including Claudio Campanini, head of European telecommunications, media and technology at advisory firm Kearney, have said that Neal's company remains open to a deal with Iliad, citing continued competitive threats. He said a deal could be desirable.
“The merger of Fastweb and Vodafone in Italy is expected to generate solid synergies for the company's investors, but will have a small impact on the competitive dynamics of fixed-line services and will have a negative impact on the competitiveness of mobile services in the country. The impact is basically zero,” Campanini said in a phone interview. on friday. “If we really want to change the Italian telecommunications industry, we need to integrate Iliad.”
Evercore is acting as lead financial advisor to Swisscom, which also works with Deutsche Bank AG and JPMorgan Chase & Co. Deutsche Bank, ING Groep NV and UniCredit SpA are the lead underwriters for the debt financing. UBS Group AG was Vodafone's sole financial advisor.
–With assistance from Edwin Chan, Paula Doenecke, and Bastian Benrath.
(Updated share move in 5th paragraph)
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