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Vodafone has agreed to sell its Italian operations to Swisscom for 8 billion euros in cash as part of Chief Executive Margherita Della Valle’s plans to streamline the UK-based telecoms group.
The company also said it will return up to 4 billion euros to shareholders through buybacks and cut its dividend to 4.5 cents per share starting next year, down from 9 cents in 2024.
Della Valle said the sale marks “the third and final step in the reshaping of our European operations” following the sale of its Spanish unit and the merger of its UK operations currently under review by the regulator of British competition.
In October the FTSE 100 company agreed to sell its Spanish operations for up to €5 billion to Zegona Communications, founded by two former Virgin Media executives.
The €4 billion in share buybacks consists of up to €2 billion following the completion of the sale of Vodafone Spain in 2025 and up to €2 billion from the sale of Vodafone Italia, which is subject to regulatory and other approvals guy.
Vodafone said the deal would see the British telecoms group exit completely from Italy, where it was “not possible” to achieve adequate returns on invested capital.
“Going forward, our businesses will operate in growth telecommunications markets – where we have strong positions – enabling us to deliver predictable and stronger growth in Europe,” Della Valle said.
The company said its biggest growth opportunity was in business-to-business and that demand for digital services was “strong.”
As part of the agreement with Italy, Vodafone will continue to provide certain services to Swisscom for up to five years. The annual fee paid by Swisscom for the first year after completion was estimated at €350 million, which Swisscom said is expected to decrease over time.
Swisscom said it plans to merge Vodafone Italia with Fastweb, its subsidiary in Italy, which will “bring together high-quality complementary mobile and fixed infrastructure, expertise and capabilities to create a leading, converging challenger in a market with material growth opportunities.”
Vodafone plans to restructure its organization into five business divisions: Germany, European Markets, Africa, Vodafone Business and Vodafone Investments, with Philippe Rogge stepping down as chief executive of Vodafone Germany and leaving the group.
The announcement comes as Britain’s competition regulator in January launched a formal investigation into the proposed merger of Vodafone’s domestic operations with CK Hutchison’s Three UK, which would create Britain’s largest mobile operator .
The deadline for the investigation expires next Friday, after which the Competition and Markets Authority could postpone the merger for a more in-depth investigation.