(Reuters) -Swisscom mentioned on Friday it is going to purchase Vodafone Italia for 8 billion euros ($8.70 billion) and merge the enterprise with its Italian subsidiary Fastweb.
The deal will create Italy’s second-biggest fixed-line broadband operator behind TIM, with a powerful presence within the prized enterprise section, and a number one participant in cell.
The debt-financed deal might be paid in money, Swisscom mentioned.
Vodafone mentioned it might return 4 billion euros of capital to shareholders and halve its dividend to 4.5 euro cents a share from its 2025 monetary yr onwards following the Italian deal and the sale of its Spanish operation agreed final yr.
“Vodafone Italia and Fastweb will carry collectively complementary high-quality cell and glued infrastructures, competencies, and capabilities to create a number one converged challenger in a market with materials progress alternatives,” Swisscom mentioned in an announcement.
The deal is anticipated to be closed within the first quarter of 2025, and won’t require a shareholder vote, Swisscom mentioned.
Swisscom, which has the Swiss authorities as its controlling shareholder, has been working in Italy since 2007 by way of Fastweb, with the enterprise rising by 50% when it comes to clients and income over the past 10 years.
“With the merger we’re creating a number one supplier in a market with nice progress alternatives and in doing so taking an enormous step in direction of our aim of worthwhile progress in Italy,” Swisscom CEO Christoph Aeschlimann mentioned in a video assertion.
Vodafone’s CEO Margherita Della Valle mentioned the deal was the third and last main step in reshaping its portfolio after she agreed to promote its Spanish operation and merge its British unit with Hutchison’s Three final yr.
Swisscom mentioned final month the deal would enhance its money move and would have “a optimistic influence on its dividend coverage”.
The Swiss agency’s Fastweb at present supplies cell companies on Hutchison’s Wind Tre’s community, and the 2 firms have an settlement to roll out 5G networks.
Della Valle, who began her Vodafone profession in Italy, is searching for to enhance Vodafone’s profitability by putting main offers, one thing which eluded her predecessor.
Traders have been uncertain concerning the offers, and Vodafone’s shares commerce at round half the extent they did two years in the past.
($1 = 0.9194 euros)
(Reporting by John Revill and Paul Sandle, enhancing by Linda Pasquini, Kim Coghill and Jane Merriman)
