28th Feb 2024 11:09
(Alliance News) - Vodafone Group PLC shares jumped on Wednesday, after it confirmed exclusive discussions with Swisscom AG regarding a potential sale of Vodafone Italy to Swisscom for cash.
This prompted analysts to say that the deal could mark a positive step for the Berkshire, England-based Vodafone's outlook, after recent struggles to reinvigorate growth in the telecommunications firm.
Subject to confirming binding transaction documentation, the parties have agreed that fellow telecommunications firm Swisscom will acquire Vodafone Italy for an enterprise value of EUR8 billion on a debt and cash free basis.
"Vodafone has engaged extensively with several parties to explore market consolidation in Italy and believes this potential transaction delivers the best combination of value creation, upfront cash proceeds and transaction certainty for Vodafone shareholders," Vodafone said.
Shares in Vodafone were up 1.5% to 69.45 pence each in London on Wednesday morning.
"Vodafone shares lifted in early trade as it confirmed it's in advanced discussions with Swisscom about the sale of its Italian arm. This is part of Vodafone's evolving strategy to improve its perfomance against its peers," said Hargreaves Lansdown analyst Susannah Streeter.
"The deal would follow hot on the heels of the sale of its Spanish division. But low sales growth relative to spending is still set to weigh on the company even as it offloads underperforming divisions."
AJ Bell said that Vodafone's share bounce "came to the rescue" for an otherwise beleaguered FTSE 100, which was down 0.6% on Wednesday morning.
"The telecoms group has been stuck in the mud for a long time, trying to revive growth and reignite a spark in the business. Work to streamline the group has already involved various deals but the market is still not convinced Vodafone has found the magic solution judging by its share price performance [down 48%] over the past five years," said AJ Bell analyst Russ Mould. "The Italian deal, if successful, is a step in the right direction but only one small piece of the puzzle."
Back in December, Bloomberg reported that Bern, Switzerland-based Swisscom was weighing an offer for Vodafone's Italian business.
Before that, Vodafone confirmed it was "exploring options with several parties" to combine or sell its telecommunications operations in Italy. The announcement by Vodafone followed a statement by French peer Iliad SA earlier saying it has submitted a proposal to the UK company to create a new joint venture company that combines Vodafone Italia and Iliad Italia.
"There can be no certainty that any transaction will ultimately be agreed," the company warned.
Shares in Swisscom were down 0.6% at CHF506.80 each in Zurich on Wednesday late morning.
By Greg Rosenvinge, Alliance News senior reporter
Comments and questions to [email protected]
Copyright 2024 Alliance News Ltd. All Rights Reserved.
Related Shares:
Vodafone