Swisscom has signed the purchase agreement for the takeover of Vodafone Italia. Swisscom is shelling out 8 billion euros for the Italian mobile communications company. Vodafone Italia is to be merged with the Milan-based Swisscom subsidiary Fastweb, according to a press release.
The deal is expected to close in the first quarter of 2025 if regulators approve. However, approval from Swisscom shareholders is not required.
The merger will create Italy’s second largest telecom provider behind the top dog TIM with combined sales of 7.3 billion euros and a combined operating profit before depreciation and amortization (EBITDA) after leasing of 2.4 billion euros.
Swisscom: “Good addition”
Vodafone Italy and Fastweb complement each other well: While Fastweb has a broadband network, Vodafone Italy contributes a mobile network. This will allow the two companies to address their respective weaknesses in the Italian telecom market and save costs. Until now, Fastweb had to rent capacity from other mobile phone providers for its mobile customers.
Legend: According to Swisscom, Vodafone Italia and Fastweb complement each other well. Fastweb is strong in the landline network, Vodafone in mobile communications. Keystone/MELANIE DUCHENE
Fastweb’s mobile phone customers will now be able to make calls using the Vodafone mobile network in Italy. This means that the joint company can offer customers bundled offers from landline and mobile communications. With the merger of Fastweb and Vodafone Italy, synergies of 600 million euros per year are expected, it is said.
More dividends
The takeover will lead to a significant increase in value. This will please Swisscom shareholders, and especially the federal treasury: The Swiss telecommunications group wants to increase the dividend from the current 22 francs to 26 francs from 2026. The aim is to further increase the dividend in the following years, it said.
The takeover will be fully financed by debt, which will increase Swisscom’s debt ratio to 2.6x net debt to EBITDA by the end of 2025. At the same time, the strong balance sheet will be maintained. “Swisscom assumes that it will be able to maintain its corporate rating of ‘A’,” the company wrote.
Approval from the federal government
There has been criticism of the deal in politics recently. Nevertheless, the board of directors unanimously approved the transaction, it was said. The federal representative also gave the green light for the billion-dollar purchase.
Federal Council conditions fulfilled
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The Federal Council has “noted” the takeover of Vodafone Italia by Swisscom. The company, whose majority shareholder is the federal government, has “fulfilled all risk-minimizing conditions”.
The Federal Council was “informed early on about the intention to purchase,” it announced on Friday. The takeover does not conflict with his strategic goals.
One of the Federal Council’s most important expectations is that the Italian and Swiss business remain organizationally and structurally separate. Swisscom is still not allowed to take on any basic service orders abroad, it was said.
For Swisscom, the takeover means a “consolidation” of its Italian subsidiary Fastweb, which it wants to merge with Vodafone Italia. The decision on the transaction lies with the authority and responsibility of the Swisscom Board of Directors.
Regardless of this, the Federal Council wants to clarify questions about privatization or partial privatization later this year. This is provided for in the federal government’s corporate governance guidelines.
«Swisscom’s Board of Directors has thoroughly and comprehensively examined the opportunities and risks of this transaction and is convinced that the opportunities for everyone involved far outweigh the risks of a transaction of this magnitude. The takeover of Vodafone Italia is in line with the Federal Council’s strategic goals for Swisscom,” explained Chairman of the Board of Directors Michael Rechsteiner.
And it’s not over with Italy yet: Swisscom and Vodafone Group are also looking into a closer business relationship. In particular, this involves possible collaboration – also beyond Italy – in various areas such as IoT, business services and solutions, procurement, operational shared services and roaming.