Vodafone Group has confirmed exclusive discussions with Swisscom AG regarding a potential sale of Vodafone Italy for cash.
Both parties have tentatively agreed that Swisscom will acquire Vodafone Italy for an enterprise value of €8 billion, on a debt and cash-free basis and subject to customary closing adjustments.
This valuation represents approximately 26 times consensus FY24F OpFCF (Operating Free Cash Flow) and about 7.6 times consensus FY24F Adjusted EBITDAaL (Earnings Before Interest, Taxes, Depreciation, and Amortization after Leases).
Vodafone said in a news statement it actively engaged with various parties to explore market consolidation in Italy and believes that this potential transaction (with Swisscom) offers the most optimal combination of value creation, upfront cash proceeds, and transaction certainty for its shareholders.
However, it’s emphasized that there is no certainty that any transaction will ultimately be agreed upon. Further announcements will be made when deemed appropriate.
Swisscom in a news statement said that it intends to merge Vodafone Italia with its local subsidiary Fastweb.
The deal, if finalized, would result in Vodafone holding a minority stake in the combined entity with Swisscom’s Italian unit. This consolidation would create Italy’s second-largest fixed-line broadband operator, second only to Tim, with a substantial presence in the lucrative business segment.
Analysts suggest that this deal would encounter fewer regulatory hurdles compared to a merger with Iliad, although it may offer lower potential synergies. Vodafone had previously turned down an offer from the French telecom operator Iliad to merge their Italian businesses.
