Swisscom buying Vodafone Italia for $8.7 billion

By Barbara Kollmeyer

Swisscom said Friday that it has entered into an all-cash deal worth EUR8 billion ($8.7 billion) to buy Vodafone Group's Italian unit .

The Swiss telecommunications company (CH:SCMN), which said late last month that it was in advanced talks to buy Vodafone Italia, will merge the unit with its Italian subsidiary, Fastweb. Earlier this year, Vodafone (VOD) (UK:VOD) rejected a bid from French telecom Iliad Group to merge their respective Italian businesses.

In early trade, Vodafone shares rose 4% and Swisscom stock gained 3%.

Swisscom said the deal would be fully debt-financed, and create annual synergies of EUR600 million. Subject to closure - seen in the first quarter of 2025 - the telecom plans to boost its annual dividend to 26 francs share, from a forecast 22 francs a share in 2025, with "the ambition for further dividend growth thereafter."

In a separate statement on Friday, Vodafone said it'll cut its dividend in half starting from 2025, but boost its stock buyback program, first by EUR2 billion once the previously announced sale of its Spanish unit completes, and then by another EUR2 billion after the Italian deal closes. Margherita Della Valle, Vodafone's chief executive, said the deal with Swisscom would create "significant value for Vodafone and ensures the business maintains its leading position in Italy."

-Barbara Kollmeyer

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03-15-24 0423ET

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