Under 100 Words: A Compact Summary
Swisscom acquires Vodafone Italia for €8 billion, merging it with Fastweb. This follows Orange’s merger in Spain. Vodafone plans to return €4 billion to shareholders. Swisscom sees a 1.8% stock rise. The deal aims to boost Swisscom’s presence, with Bern’s backing. Vodafone focuses on profitability under Della Valle’s leadership (Vodafone Sells Italian Operations to Swisscom).
- On Friday, Swisscom announced its acquisition of Vodafone Italia for 8 billion euros ($8.7 billion), intending to merge the company with its Italian subsidiary Fastweb. This move marks the latest phase of consolidation in Europe’s highly competitive telecommunications markets.
- Following the approval earlier this week of the merger between French mobile operator Orange’s Spanish business and rival MasMovil, the acquisition of Vodafone Italia by Swiss government-controlled Swisscom was announced.
- The deal will be financed through debt and paid in cash. Additionally, Vodafone stated its intention to return 4 billion euros of capital to shareholders and reduce its dividend to 4.5 euro cents per share from the 2025 financial year onwards, following the Italian deal and the sale of its Spanish operation to Zegona Communications last October.
- In London, Vodafone’s shares rose by 3.2%, while Swisscom saw a 1.8% increase on the Zurich exchange (Vodafone Sells Italian Operations to Swisscom).
- The acquisition by Swisscom will establish Italy’s second-largest fixed-line broadband operator, trailing behind TIM, and will also solidify its presence in the lucrative business segment while becoming a prominent player in the mobile sector.
- This move comes amid challenges for operators to generate returns on capital, particularly evident in Swisscom’s case with nearly stagnant revenue growth despite its dominant position in Switzerland (Vodafone Sells Italian Operations to Swisscom).
- Swisscom CEO Christoph Aeschlimann emphasized the strategic rationale behind the deal, citing the company’s extensive experience in the Italian market spanning 17 years and the need for expansion beyond Switzerland.
- He expressed confidence in the transaction’s ability to enhance Swisscom’s overall position, hinting at potential future deals while emphasizing the current focus on integrating Vodafone Italia.
- Swisscom’s decision was supported by Bern, which holds a majority 51% stake in the company, according to Aeschlimann (Vodafone Sells Italian Operations to Swisscom).
- The Swiss government announced plans to review its ownership strategy for Swisscom throughout 2024, mentioning possibilities of privatization or partial privatization without providing further specifics (Vodafone Sells Italian Operations to Swisscom).
- Swisscom aims to achieve annual savings of 600 million euros primarily by transitioning mobile phone customers from Fastweb to the Vodafone network.
- The closure of the deal is anticipated in the first quarter of 2025 and will not necessitate a shareholder vote (Vodafone Sells Italian Operations to Swisscom).
- Vodafone’s CEO Margherita Della Valle described the agreement as the final step in reshaping its European portfolio, following the sale of its Spanish operation and the merger of its British unit with Hutchison’s Three last year.
- Della Valle, who began her career at Vodafone in Italy, aims to enhance Vodafone’s profitability through significant deals, a goal that proved elusive for her predecessor.
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