The share price of Vodafone Group PLC (GB:VOD) gained over 6% after France-based telecom firm Iliad SA proposed a merger of its Italian business with Vodafone Italia. Iliad valued Vodafone Italia at €10.45 billion. The news comes a month after Vodafone announced that it was exploring options for its Italian business, as the market is struggling with lower revenues and margins and competition is intense.
In the first half of FY24, Vodafone’s Italian business generated a service revenue of around €2 billion, experiencing a year-on-year organic decline of 1.3%. The company is looking to consolidate its business in markets where it is not achieving satisfactory performance.
Vodafone is a European telecommunications company that provides a range of services, including voice, messaging, and internet connectivity for both fixed and mobile networks.
More Details About the Proposal
According to the proposal, Vodafone and Iliad will each get a 50% stake in the new business. Further, Vodafone would get €6.5 billion in cash and an additional €2 billion in a shareholder loan, aimed at ensuring “long-term alignment.” On the other hand, Iliad will receive €500 million in cash, a €2 billion shareholder loan, and the option to acquire an additional 10% every year from Vodafone at a mutually agreed price.
According to the proposal statement, the combined business is anticipated to generate revenues of approximately €5.8 billion and EBITDA (after leases) of around €1.6 billion in the financial year ending in March 2024.
The deal proposal is in the early stages, and there is no certainty regarding final approval.
Is Vodafone a Good Share to Buy?
According to TipRanks, VOD stock has received a Hold rating based on a total of 10 recommendations. The average price forecast is 99.10p, with a high forecast of 165p and a low forecast of 68p. The Vodafone share price target implies an upside of 44.8% on the current trading levels.
