Vodafone is selling its Italian business to Swisscom for €8bn (£6.8bn) cash and plans to return €4bn to shareholders.
The telecoms company said it had reached an agreement to sell Vodafone Italy as part of wider plans to streamline its European operations and that some of the proceeds would be returned to investors via share buy-backs. Vodafone will continue to provide certain services to Swisscom for up to five years as part of the transaction.
The disposal in Italy is one of a number of steps that the chief executive, Margherita Della Valle, has taken to reposition Vodafone as the firm restructures in markets where its returns are below the cost of capital.
Her actions have also included a €5bn disposal of its Spanish business to Zegona Communications as well as a proposed merger with Three in the UK – which would create the UK’s largest mobile phone operator.
The Three deal is being examined by the Competition and Markets Authority, the antitrust regulator, which is looking at whether the transaction should proceed or whether the acquisition should be subjected to a more detailed phase 2 investigation on competition grounds.
Vodafone, which has seen its share price stall to 25-year lows, has said it wants to focus on its B2B business and on those growing telecoms markets in Europe where it already holds a strong position as well as its African operations.
Della Valle said on Friday that she had previously made clear that repositioning Vodafone would “not be a quick fix”.
She said: “Vodafone needed to change. We needed to take action where our returns were below cost of capital in Italy, Spain and the UK. We needed to take action on the three markets – we have done it now and you will see a new Vodafone in Europe.”
She said the Italian sale was the third and final step so Vodafone could target “predictable, faster growth” in Europe.
After the deal, Vodafone plans to rebase its dividend to 4.5 cents a share from 2025 onwards against nine cents for 2024.
The total return to shareholders for 2025 will be up to €3.1bn, representing €1.1bn in dividend payments and up to €2bn in share buybacks – a 23% increase in the expected total returns to shareholders in 2024 of €2.5bn.
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Shares in Vodafone were up 4% on Friday at 69p.
Della Valle said Vodafone had examined other options for its Italian business, including a merger with the Italian business of Iliad, the French telecoms company, but had concluded this could have prompted regulatory concerns and Vodafone would have “remained exposed to a highly leveraged joint venture in Italy” if such a deal had gone ahead.
Vodafone reiterated on Friday that it saw its biggest growth in B2B, where it is well placed to support the public sector and small businesses hoping to transition to generative artificial intelligence and the cloud. It also highlighted new opportunities in Africa, where it believes there is an opportunity to expand its mobile and fixed-line businesses and where its fintech platform already has more than 75 million customers.
