UK-based Vodafone Group PLC (GB:VOD) announced the completion of its €8 billion deal with Switzerland’s Swisscom AG (DE:SWJ), marking the British company’s exit from Italy. The company transferred the ownership of its Italian unit, Vodafone Italia, to Swisscom, completing the process ahead of schedule. Following the announcement, Vodafone shares gained 0.97% on Thursday.
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Vodafone is a European telecommunications company that provides a range of services for both fixed and mobile networks.
Vodafone Targets Debt Cut and Share Buyback
According to the statement, Vodafone will use the proceeds from the sale to reduce its net debt. Additionally, the board aims to return up to €2.0 billion to shareholders after the completion of the current buyback program.
After the completion, Swisscom will begin merging Vodafone Italia with its Italian business, Fastweb. The merged entity will operate under the combined Vodafone + Fastweb identity, though the Vodafone brand name will be retained for the time being. Meanwhile, the companies have agreed that Vodafone will continue to provide certain services to Vodafone Italy for up to five years.
Vodafone Focuses on Streamlined Growth
The sale marks the final phase of Vodafone’s strategy to simplify its portfolio. In May 2023, the company revealed a revamped European portfolio, which included plans to sell its operations in Italy and Spain. This move allows the company to concentrate on strengthening its presence in key telecom markets, where it has strong positions, to foster sustainable growth across Europe.
As part of this strategy, the company has also sold its Spanish operations and merged its UK unit with CK Hutchison’s (HK:0001) Three UK.
Is Vodafone a Buy or Sell?
According to TipRanks, VOD stock has a Hold rating based on nine recommendations. It includes six Holds, two Buys, and one Sell rating. The Vodafone share price target is 86.07p, which implies an upside of 25% on the current trading levels.
