Swisscom has made headlines with its announcement of a cash deal to acquire Vodafone Italia for EUR 8 billion on a debt and cash-free basis.
This strategic move is expected to benefit both Vodafone Italia and Fastweb, a subsidiary of Swisscom, by enhancing scale, optimizing cost structures, and generating significant annual synergies estimated at around EUR 600 million, Swisscom said in a news statement.
The acquisition marks a major step for Swisscom in realizing its strategic objective of achieving profitable growth in Italy, which stands as Europe’s fourth-largest broadband market. Having operated in Italy since 2007 through Fastweb, Swisscom has experienced remarkable growth of over 50 percent in terms of customers, revenue, and adjusted EBITDA over the past decade. On the other hand, Vodafone Italia brings to the table its reputation as a premium mobile network operator with a substantial customer base.
One of the key advantages of this acquisition lies in the potential enhancement of broadband service quality for customers. By combining Fastweb’s wireline network with Vodafone’s 5G-based Fixed Wireless Access (FWA), residential customers in Italy can expect access to high-performance combined fiber and mobile solutions.
The EUR 8 billion enterprise value of the deal translates to transaction multiples of 5.1x EBITDAaL and 9.2x OpFCF, based on the estimated annual synergies. The acquisition will be financed entirely through debt, resulting in an increase in Swisscom’s leverage to 2.6x (Net Debt/EBITDA) by the end of 2025, while maintaining a robust balance sheet.
The completion of the transaction is contingent upon regulatory and customary approvals and is anticipated to occur in the first quarter of 2025. Notably, it does not necessitate a vote from Swisscom shareholders. Following the acquisition, the combined entity and Vodafone will enter into various service agreements, including a brand license agreement permitting the use of the Vodafone brand in Italy for up to five years post-closing.
Furthermore, Swisscom and Vodafone Group are exploring opportunities for collaboration beyond Italy, encompassing areas such as IoT, enterprise services and solutions, procurement, operational shared services, and roaming.
Christoph Aeschlimann, CEO of Swisscom, expressed optimism about the deal, stating, “Fastweb and Vodafone Italia are an ideal fit to create high added value for all stakeholders. As a result, private and business customers will benefit from the most comprehensive offer.”
Swisscom said the existing network expansion targets, such as optical fibre coverage of 75 to 80 percent by 2030, remain unchanged. Swisscom’s operations in Switzerland and Italy will continue to be managed by two separate management teams.
Margherita Della Valle, CEO of Vodafone Group, echoed similar sentiments, emphasizing the creation of a robust converged telco in the Italian market and the potential for broader commercial partnerships between Swisscom and Vodafone.
Despite the acquisition, Swisscom reassured that its network expansion targets, including optical fiber coverage goals, remain unchanged. Operations in Switzerland and Italy will continue to be managed separately by two distinct management teams.
