Swisscom (SCMN.S), opens new tab said on Friday it would buy Vodafone Italia for 8 billion euros ($8.7 billion) and merge the business with its Italian subsidiary Fastweb in the latest round of consolidation in Europe’s most competitive telecoms markets, according to ”reuters.com”.
The deal follows the merger of French mobile operator Orange’s (ORAN.PA), opens new tab Spanish business with rival MasMovil, that was approved earlier this week, and Vodafone (VOD.L), opens new tab selling its Spanish unit to Zegona Communications (ZEG.L), opens new tab last October.
Swiss government-controlled Swisscom said the all-cash deal would be debt financed.
Vodafone said it would return 4 billion euros of capital to shareholders.
Analysts at Berenberg said Swisscom was increasing its exposure to the highly competitive Italian market and diversifying further away from its safe-haven Swiss core.
The Swisscom deal will create Italy’s second-biggest fixed-line broadband operator behind TIM (TLIT.MI), opens new tab, with a strong presence in the prized business segment, and a leading player in mobile.
It comes as mobile operators have struggled to make returns on capital in Italy after France’s Iliad arrived in 2018 with cut-price offers.
Swisscom CEO Christoph Aeschlimann said the deal made strategic sense in view of his company’s long involvement in Italy and the „flattish” development at home.
„We are in the Italian market in 17 years so this is a next step… reinforcing our position in the market where we are very successful,” he told reporters. „I am 100% convinced that this transaction strengthens Swisscom as a whole.”
Swisscom’s move was backed by Bern, which holds a 51% stake, Aeschlimann said.
The Swiss government said it would review its Swisscom stake this year, including „issues of privatization or partial privatization of the company,” without giving more details.
Swisscom has targeted 600 million euros in annual savings mainly from migrating mobile customers from Fastweb to the Vodafone network.
Read the full art. on ”reuters.com”.
