Vodafone confirms sale of Italian unit with £3.4bn set to be returned to investors

Vodafone has finally agreed to sell its Vodafone Italia business to rival Swisscom for €8bn (£6.8bn) in cash, with the telecoms giant set aside half the amount for payments to shareholders.

This follows efforts to “right-size” Vodafone’s portfolio by selling underperforming assets, having also agreed to sell Vodafone Spain to Zegona Communications last October, merging its UK business with Three and prepared about 11,000 job cuts in three years.

The sale of Vodafone Spain and Italy has brought the group €12 billion, of which €4 billion, or approximately £3.4 billion, will be paid to shareholders through buybacks, it said on Friday.

However, the group will also halve its dividend to 4.5 cents from 2025.

vodafone shares They rose 3.8 per cent to 68.6p at midday on Friday. They are still down about 27 percent over the past 12 months.

Shareholders will receive the first tranche of €2 billion through buybacks once the sale of Vodafone Spain is completed, while the completion of the Italian deal will trigger an additional payment of €2 billion.

Vodafone expects shareholders to receive “up to” €3.1 billion during its 2025 fiscal year, taking into account €1.1 billion in ordinary dividend payments and representing a 23 percent increase on the €2.5 billion it plans to pay to investors this year.

Boss Margherita Della Valle said: “The sale of Vodafone Italia to Swisscom creates significant value for Vodafone and ensures the business maintains its leading position in Italy, which has been built thanks to the dedicated commitment of our colleagues to serve our customers. for many years”.

He added that the “restructuring” of Vodafone’s European operations will see the group focus on markets “where we maintain strong positions… allowing us to deliver stronger and more predictable growth.”

Vodafone also told shareholders it would accelerate its investment in its business-to-business operations, and that the group intends to “further strengthen our range of platforms and capabilities”.

It also hopes to strengthen and expand partnerships, such as the 10-year artificial intelligence deal agreed with Microsoft last year.

Hargreaves Lansdown senior equity analyst Sophie Lund-Yates said: “Telecoms is unlikely to ever dampen growth in terms of growth, but the reliable nature of its revenues and high barriers to entry make profitability For shareholders, it is one of the main attractions of these actions.

‘Vodafone’s Italian business has been struggling, so shedding this weight should help the group refocus and the division has been up for sale for some time.

“The focus will now be on how effectively Vodafone uses its resources to address broader challenges, including high debt, costs and some growing competition.”