The operator Swisscom announced on Friday that it had signed with its British counterpart Vodafone Group to buy the entirety of Vodafone Italia for 8 billion euros (7.6 billion francs) in cash.
The latter will be merged with Fastweb, the transalpine subsidiary of the blue giant. The Federal Council approved this acquisition and will examine a privatization of the group.
‘Vodafone Italia and Fastweb will bring together their infrastructures, their skills and their mobile and fixed capabilities (…) to create a leading provider of convergent offers in a market which is characterized by growth opportunities’, indicated the Swiss group in a press release.
According to the historic Swiss operator, ‘the transaction constitutes a crucial operation enabling Swisscom to achieve its strategic objective of profitable growth in Italy’ and to ‘considerably strengthen its positioning’ south of the Alps where it has been present with Fastweb since 2007.
As for Vodafone Italy, it is described as ‘a quality mobile communications operator serving a very large customer base’. Its acquisition will make it possible to combine Fastweb’s fixed network with the mobile communication services of the now former British operator.
The Federal Council, for its part, considered that the takeover of Vodafone Italia by Swisscom – majority owned by the Confederation – ‘is not contrary to the strategic objectives assigned’ to the Swiss group.
‘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 government insisted in a press release, adding that the merger ‘falls within the competence and responsibility of the board of directors of Swisscom’.
Examination in 2024 of a privatization
Bern also intends to examine the total or partial privatization of the blue giant this year.
Swisscom confirmed at the end of February ‘exclusive negotiations’ with Vodafone concerning an acquisition of the activities in Italy of its British competitor.
This operation should make it possible to achieve synergies of 600 million euros per year and increase the dividend to 26 francs for 2025. The acquisition will be entirely financed by a loan, which will bring Swisscom’s debt to equivalent of 2.6 times net debt compared to gross operating profit (Ebitda) at the end of 2025, ‘while maintaining a solid balance sheet’, insisted Swisscom, which hopes to maintain its ‘A’ credit rating.
This acquisition must be finalized in the first quarter of 2025. Swisscom’s new Italian entity will be able to use the Vodafone brand in Italy for five years. The British group will provide certain services for a total initial annual fee of around €350 million, which will decrease over time. The two groups will also examine ‘a closer commercial relationship’.
/ATS