Vodafone has made a notable operational change under chief executive officer Margherita Della Valle, with another sale of an international business unit.
Vodafone announced the “final step of the portfolio right-sizing”, with a “binding agreement to sell 100 percent of its Italian operations (aka Vodafone Italy) to Swisscom AG” for €8bn in cash.
Vodafone has been “reshaping” its European operations of late to focus on growth markets. Last November Vodafone exited the Spanish market, after agreeing to to sell Vodafone Spain to UK-based telecoms investment firm Zegona Communications for $5.3 billion.
Portfolio shakeup
And of course Vodafone is also potentially reshaping the UK mobile sector, after announcing in June 2023 that it will merge its UK operation with Three UK to create the largest mobile operator in Britain.
When complete, Vodafone UK will own 51 percent of combined entity, and the merger will allow it to present an improved challenge to domestic players BT/EE and Virgin Media O2.
Vodafone was (at one stage) the world’s largest mobile operator (in terms of revenue) during its expansionist period under Sir Christopher Gent in the 1990s and early 2000s.
In recent years Vodafone has struggled in its traditional strongholds of Europe, amid intense competition, difficult regulatory environments and falling legacy revenue.
In May 2023 Vodafone said it had embarked on a “new roadmap” when it confirmed it would axe 11,000 jobs.
Vodafone Italy
Now Vodafone has said that with the sale of Vodafone Italy and Vodafone Spain, together with the merger of Vodafone UK and Three UK, it can now focus its operations in Europe on growing markets, where its holds “strong positions with good local scale.”
“Today, I am announcing the third and final step in the reshaping of our European operations,” said Vodafone chief executive Margherita Della Valle. “Going forward, our businesses will be operating in growing telco markets – where we hold strong positions – enabling us to deliver predictable, stronger growth in Europe. This will be coupled with our acceleration in B2B, as we continue to take share in an expanding digital services market.”
Vodafone CEO Margherita Della Valle. Image credit Vodafone
“The sale of Vodafone Italy to Swisscom creates significant value for Vodafone and ensures the business maintains its leading position in Italy, which has been built through the dedicated commitment of our colleagues to serving our customers over many years,” said Della Valle.
“Our transactions in Italy and Spain will deliver €12 billion of upfront cash proceeds and we intend to return €4 billion to shareholders via buybacks, as part of our broader capital allocation review,” Della Valle said.
As part of the transaction, Swisscom have agreed that Vodafone will continue to provide certain services to Swisscom for up to 5 years for an annual fee of roughly €350 million, which Swiscomm reportedly said is expected to decrease over time.
It is understood that Swisscom intends to merge Vodafone Italy with Fastweb, its subsidiary in Italy.