Swisscom is buying the mobile operator Vodafone Italia, which it intends to merge with its subsidiary Fastweb. The Swiss telco is putting 8 billion euros on the table for the operation. Within the Federal Parliament, the takeover is controversial.
Updated March 15, 2024: The parties agree: Swisscom confirms the acquisition of Vodafone Italia and the merger of the company with Fastweb. The operator will pay 8 billion euros which it will finance via a loan.
The company that will emerge from the merger of Vodafone Italia and Fastweb “will offer many benefits to consumers, businesses in Italy and the country itself,” writes Swisscom. “We have built a strong track record of investment and profitable growth in Italy since then. We are convinced by the industrial logic of this merger. Fastweb and Vodafone Italia complement each other ideally with a view to generating strong added value for all stakeholders. Both private and commercial customers will therefore benefit from the most comprehensive offering. Swisscom will also emerge stronger as a whole, which will enable it to maintain significant investments in Switzerland and Italy,” comments Christoph Aeschlimann, CEO of Swisscom.
The Federal Council takes note of the acquisition of Vodafone Italia by Swisscom. He notes that a takeover of Vodafone Italia is not contrary to its strategic objectives. The executive indicates that it has defined various conditions for this purpose aimed at minimizing risks, which Swisscom once again confirmed having fulfilled. “One of the main expectations of the Federal Council is that Italian and Swiss activities remain organizationally and structurally separate. The requirement that Swisscom must not assume a universal service mandate abroad remains unchanged.
The SVP calls for measures
In Parliament, the upcoming transaction continues to be talked about. In a motion tabled on March 13, the UDC group asks the Federal Council “to explain to the Swisscom board of directors that Swisscom cannot buy Vodafone Italia”. As long as the Confederation holds a majority stake in the telecommunications company, Swisscom is not an independent private company, explains the text. “The Confederation, and therefore ultimately the taxpayers, are responsible for all of Swisscom’s commercial risks, including in the case of operations abroad. With the planned takeover of Vodafone Italia, Swisscom is taking too high a risk for Swiss taxpayers.
In a motion tabled the same day, UDC national councilor Franz Grüter asks the Federal Council “to adapt its ownership strategy for its public companies so as to renounce takeovers of companies abroad and to compulsorily involve the Parliament”. If the board of directors nevertheless imposes such a takeover and it goes wrong, the Federal Council should take legal action.
Although the Federal Council does not refer to these motions, it nevertheless specifies that the decision relating to the transaction falls within the final competence and responsibility of the Swisscom board of directors. “Regardless of the transaction, the Confederation’s ownership strategy regarding Swisscom must be reviewed later this year, as provided for in the Confederation’s guiding principles on corporate governance. This examination will cover questions of privatization or partial privatization of the company.
Completion of the Vodafone-Italia acquisition is still subject to regulatory clearances and other customary approvals.
Update of March 5, 2024: The proposed takeover of Vodafone by Swisscom is being debated under the Dome (update). Swisscom’s plan to buy Vodafone Italia provokes mixed reactions among politicians. Some are in favor of privatizing the company or at least asking that this possibility be examined, reports Blick. Among them, we find, for example, the president of the Liberal Greens Jürg Grossen or the center politician Philipp Kutter. In a press release, the SVP also believes that Swisscom must be privatized if it wants to enjoy total business freedom.
Blick also points out that rural regions have reservations about privatization. The daily quotes in particular Martin Candinas, national advisor of the Center (Graubünden): “A fully privatized Swisscom, which would only be held to performance, would be a catastrophe for rural and mountain regions”. Finally, PS national councilor Jacqueline Badran is in favor of canceling the partial privatization of Swisscom.
In front of Parliament, Federal Councilor Albert Rösti also spoke about the plans for the takeover of Swisscom by Vodafone. UDC politician Franz Grüter wanted to know whether there was a strategy that would prohibit takeovers of foreign companies. In his response, Albert Rösti referred to a series of conditions that the takeovers envisaged by Swisscom must meet: thus, the telecommunications group cannot take stakes abroad in telecommunications companies with a universal service mandate . Other participations are possible if they support the basic mission in Switzerland or present another strategic and industrial logic. If the conditions are met and an agreement is compatible with the strategic objectives, it is not possible to prohibit it.
The Federal Council expects Swisscom to only take participations or cooperations abroad if they contribute to sustainably increasing the value of the company, said Albert Rösti. In addition, the government expects that such cooperation will be well supervised from a management point of view and that risks will be sufficiently taken into account.
Original news from February 28, 2024: Swisscom wants to buy Vodafone Italia. Swisscom wants to take over the Italian activities of the mobile telephone operator Vodafone and merge them with its own Milanese broadband internet subsidiary Fastweb. The exact conditions still need to be negotiated, but a provisional agreement has been reached on a purchase price of 8 billion euros, Swisscom reports. However, it is still unclear whether the agreement will actually materialize.
Swisscom explains that the transaction would be an important step towards achieving its objective of increasing the long-term value of its activities in Italy and the strategic objectives of the Federal Council. Vodafone Italia and Fastweb would bring together quality, complementary mobile and fixed network infrastructure, skills and capabilities, and together become a leading converged provider.
Swisscom bought Fastweb in spring 2007 for almost 7 billion euros – with the aim of offsetting the expected erosion of turnover in its Swiss operations. It was Swisscom CEO Carsten Schloter, who died in 2013, who organized the operation. The involvement in Italy, however, caused problems for Swisscom: in 2010, a VAT procedure against former members of Fastweb’s management turned into a money laundering scandal. A year later, Swisscom had to write off 1.3 billion euros in its Italian subsidiary.
In 2013, however, Fastweb enabled Swisscom to achieve a quantum leap in profits for the first time. Italian activity, long moribund, has become an engine of growth: in 2016, Mario Rossi, then financial director, declared at a press conference presenting the results: “Swisscom’s growth comes from Italy”.