By John Revill
ZURICH (Reuters) -Swisscom mentioned on Friday it can purchase Vodafone Italia for 8 billion euros ($8.7 billion) and merge the enterprise with its Italian subsidiary Fastweb within the newest spherical of consolidation in Europe’s best telecoms markets.
The acquisition follows the merger of French cell operator Orange’s Spanish enterprise with rival MasMovil, that was authorized earlier this week, and Vodafone promoting its Spanish unit to Zegona Communications final October.
Swiss government-controlled Swisscom mentioned the Vodafone Italia deal can be debt-financed and paid in money.
Vodafone mentioned it could return 4 billion euros of capital to shareholders and halve its dividend to 4.5 euro cents a share from its 2025 monetary 12 months onwards after the Italian deal and the sale of its Spanish operation.
Its shares have been 3.2% up in London whereas Swisscom gained 1.8% on the Zurich alternate.
The Swisscom deal will create Italy’s second-biggest fixed-line broadband operator behind TIM, with a robust presence within the prized enterprise section, and a number one participant in cell.
It comes as operators have struggled to make returns on capital lately, whereas Swisscom – the dominant participant in Switzerland – has laboured with virtually flat income development.
Swisscom CEO Christoph Aeschlimann mentioned the deal made strategic sense in view of his firm’s lengthy involvement in Italy and the “flattish” growth at house.
“We’re within the Italian market in 17 years so it is a subsequent step… reinforcing our place available in the market the place we’re very profitable,” he instructed reporters. “I’m 100% satisfied that this transaction strengthens Swisscom as a complete.”
He didn’t rule out additional offers sooner or later, however mentioned the corporate will give attention to integrating Vodafone Italia first.
Swisscom’s transfer was backed by Bern, which holds a 51% stake, Aeschlimann mentioned.
The Swiss authorities mentioned its possession technique for Swisscom can be reviewed over the course of 2024, noting it was a course of which “consists of problems with privatization or partial privatization of the corporate,” with out giving extra particulars.
Swisscom has focused 600 million euros in annual financial savings primarily from migrating cell phone clients from Fastweb to the Vodafone community.
The deal is predicted to be closed within the first quarter of 2025, and won’t require a shareholder vote.
Vodafone’s CEO Margherita Della Valle mentioned the deal was the third and last main step in reshaping its European portfolio after she agreed to promote its Spanish operation and merge its British unit with Hutchison’s Three final 12 months.
Della Valle, who began her Vodafone profession in Italy, is searching for to enhance Vodafone’s profitability by hanging main offers, one thing which eluded her predecessor.
($1 = 0.9194 euros)
(Reporting by John Revill, further reporting by Linda Pasquini, Louis van Boxel-Woolf, Gdansk newsroom, Paul Sandle in London, Dave Graham in Zurich;Modifying by Kim Coghill, Jane Merriman and Emelia Sithole-Matarise)
