Swisscom to acquire Vodafone Italia in major leap towards converged connectivity

In a landmark move within the telecommunications sector, Swisscom has finalized binding agreements to acquire 100% of Vodafone Italia from Vodafone Group Plc for an impressive EUR 8 billion, executed on a debt and cash-free basis. This acquisition, primarily cash-based and fully financed through debt, marks a pivotal step for Swisscom, aiming to merge Vodafone Italia with its Italian subsidiary, Fastweb. The amalgamation is poised to forge a leading converged challenger in the Italian market, harnessing the strengths of both companies’ mobile and fixed infrastructures, competencies, and capabilities.

The transaction is anticipated to bring about substantial benefits, including an enhanced scale, a more efficient cost structure, and estimated annual run-rate synergies of approximately EUR 600 million. These factors are expected to unlock significant value for stakeholders, bolster investments in the Italian telecommunication landscape, and deliver competitively priced, innovative converged services to enhance customer experience across various market segments.

The EUR 8 billion valuation of this acquisition implies attractive transaction multiples and promises substantial value creation for Swisscom’s shareholders. It is forecasted to be free cash flow neutral to Swisscom in the first year post-closing and accretive thereafter, excluding integration costs. The move will not only bolster Swisscom’s leverage but also maintain its robust balance sheet and «A» corporate credit rating. With the acquisition set to close in Q1 2025, Swisscom anticipates increasing its annual dividend post-completion.

By integrating Vodafone Italia’s premium mobile network with Fastweb’s fixed connectivity prowess, the merged entity is set to offer unparalleled service quality and connectivity. This union is particularly beneficial for mobile and broadband customers, promising improved connectivity, service quality, and access to combined fibre and mobile solutions. Additionally, the partnership will empower B2B customers with a more comprehensive range of IT and communication services, accelerating digitalization across enterprises and public administrations in Italy.

The transaction not only reinforces Swisscom’s commitment to the Italian market but also aligns with its strategic objective of profitable growth in Italy. Since acquiring Fastweb in 2007, Swisscom has significantly expanded its footprint, establishing itself as a leading competitor in Europe’s fourth-largest broadband market. This merger is expected to enhance Swisscom’s commercial resilience, ensuring sustained investment in network infrastructure and innovation, thereby supporting Italy’s digital advancement.

Executives from Swisscom and Vodafone Group have expressed strong support for the merger, emphasizing its strategic logic and the value it will bring to all stakeholders. The acquisition has received unanimous approval from Swisscom’s Board of Directors, affirming its alignment with the Federal Council’s strategic objectives for Swisscom and its benefits for Switzerland at large.

In conclusion, the acquisition of Vodafone Italia by Swisscom represents a strategic maneuver to enhance its market presence in Italy, promising to deliver significant benefits to consumers, businesses, and the broader telecommunications landscape. As regulatory and customary approvals are awaited, the industry watches closely, anticipating the potential transformations this merger will bring about in the Italian market and beyond.