Swisscom to buy Vodafone Italia for 8 billion euros

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Swisscom hopes to finalize its takeover of Vodafone Italia, subject to regulatory approval, in the first quarter of 2025 (AFP/Archives/Arnd Wiegmann, BEN STANSALL)

Swisscom, the historic telecoms operator in Switzerland, will buy the Italian subsidiary of the British giant Vodafone for 8 billion euros with the aim of merging it with its own subsidiary Fastweb.

This acquisition should allow it to strengthen its position in Italy, the market where it is already recording its strongest growth thanks to Fastweb, acquired in 2007, Swisscom announced in a press release on Friday, specifying that it had signed a binding agreement with Vodafone.

For the British group, which has repeatedly rejected advances from the French Iliad, this transaction marks “the third and final stage” of a reorganization of its activities in Europe, after the sale of its branch in Spain and the merger in the Kingdom -United with Three UK of the Hong Kong conglomerate CK Hutchinson, underlined its general director, Margherita Della Valle, in a separate press release.

The sale of this subsidiary in Italy and its activities in Spain will allow Vodafone to garner 12 billion euros in liquidity, said the boss of Vodafone, specifying that the group intends to return 4 billion euros to its shareholders under the form of share buyback.

The Swiss group also intends to take care of its shareholders following this transaction, subject to the approval of regulatory authorities and which it hopes to complete in the first quarter of 2025.

Swisscom, whose dividend amounts to 22 Swiss francs (22.86 euros) per share for 2023, intends to increase it to 26 Swiss francs for the 2025 financial year, specifying that the payment will take effect in 2026 after the closure of the 2025 accounts. It plans to increase it further thanks to the expected economies of scale and synergies, estimated at 600 million euros per year.

In 2023, Swisscom generated a turnover of 11 billion Swiss francs

In 2023, Swisscom generated a turnover of 11 billion Swiss francs (AFP/Archives/Arnd Wiegmann)

The transaction, which will be settled in cash and financed by borrowing, will increase the debt of the operator which nevertheless ensures that its balance sheet will remain solid.

At 10:27 GMT, Swisscom shares gained 2.66% to 517.20 Swiss francs, countering the trend of the SMI, the benchmark index of the Swiss Stock Exchange (-0.02%). On the London Stock Exchange, Vodafone shares rose 3.25% to 68.24 pence.

The merger of Vodafone and Fastweb will create “a solid competitor in the most difficult telecoms market in Europe”, reacted Mark Diethelm, analyst at Vontobel, in a stock market commentary. This is “a “quantum leap” for Swisscom, said Christian Bader, analyst at Zurich Cantonal Bank, in a market note.

In 2023, Swisscom managed to increase its turnover by 0.2% to 11 billion Swiss francs, largely thanks to Fastweb.

“We are convinced by the industrial logic of this merger. Fastweb and Vodafone Italia complement each other ideally,” assured Christoph Aeschlimann, CEO of Swisscom, quoted in the press release. According to Swisscom, the combined entity will be more solid and will guarantee long-term sustainable investment levels in infrastructure in Italy.

© 2024 AFP

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