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Swisscom in ‘exclusive’ talks to buy Vodafone Italy for €8 billion

The Swiss group has confirmed that it is in “exclusive negotiations” with its British counterpart regarding an all-cash acquisition of Vodafone Italia, as stated in a press release published on Wednesday. Upon completion of the takeover, the target company is set to merge with Fastweb, the Swiss firm’s Italian subsidiary.

The enterprise value of Vodafone Italia has been calculated based on a multiple of 26 for operating cash flow and a multiple of 7.6 for earnings before interest, taxes, depreciation and amortisation (EBITDA) expected this year, Vodafone said in a separate statement.

The British giant stated that it has “entered into exclusive negotiations with a number of parties to explore market consolidation in Italy”. However, both groups warned that the outcome of the negotiations was still open.

According to Vodafone Group’s annual report, Vodafone Italia had 5,733 employees last year, with sales of €4.8 billion (down 4.2%) and adjusted EBITDA of €1.5 billion.

Fastweb, with over 3,100 employees, reported a 6.1% increase in revenues to €2.63 billion in 2023, while EBITDA fell by 6.6% to €798 million. The Italian subsidiary boasts 3.5 million customers in a telecoms market estimated at €12 billion, which is described as “one of the most competitive in Europe” for mobile communications, as detailed in its annual report by Swisscom.

The Swiss company expects this takeover to increase its enterprise value and cash flow. The transaction should also have a positive effect on dividends.

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