The deal was closed for an enterprise value of €5.0 billion, comprising €4.1 billion in cash and €0.9 billion in redeemable preference shares. This strategic move allows Vodafone to focus on markets with sustainable structures and local scale, and it continues to have a presence in Spain through its Innovation Hub in Málaga.
The selling entity is Vodafone Europe B.V. which is a 100% owned subsidiary of Vodafone Group Plc. The buying entity is Zegona Bidco, S.L.U. which is a 100% owned subsidiary of Zegona Communications plc.
Vodafone Spain was an attractive asset with significant market shares in mobile, broadband, and TV, and a gigabit-capable fixed network passing 10.7 million homes.
By divesting from the Spanish market, Vodafone aims to concentrate its resources on markets where it can achieve sustainable growth and improved returns.
Earlier in March, Vodafone Group Plc has completed the sale of its Italian operations, Vodafone Italy, to Swisscom AG. The transaction was finalized for an enterprise value of €8 billion, which includes €8 billion in upfront cash proceeds. This strategic move is part of Vodafone's broader plan to reshape its European footprint, focusing on growing markets where the company holds strong positions with good local scale.
The sale of Vodafone Italy follows Vodafone's divestiture of Vodafone Spain and the merger of Vodafone UK and Three UK. With these changes, Vodafone aims to accelerate its performance in markets where it can create value, particularly in the B2B sector, as demand for digital services continues to expand.
This decision reflects Vodafone's new capital allocation framework, which includes a dividend rebased to 4.5c per share from FY25 onwards and a €4 billion capital return to shareholders via share buybacks. The sale is expected to result in a step-up of Vodafone Group's Return on Capital Employed (ROCE) of more than 1 percentage point.
Swisscom plans to merge Vodafone Italy with Fastweb, its own unit in Italy, which is anticipated to maintain Vodafone Italy's leading position in the Italian market. This consolidation is seen as a value-creating step for both Vodafone and Swisscom, ensuring the continued provision of high-quality telecommunications services in Italy.
Following the strategic divestitures in Italy and Spain, Vodafone is now aiming to grow in markets where it holds strong positions with good local scale. This includes leveraging opportunities with Vantage Towers and enhancing commercial performance, especially in Germany.
Challenges in European Markets
Vodafone, as one of the world's largest telecommunications companies, faces several challenges in its European markets. The telco company operates in a complex regulatory landscape across its core European markets. This includes countries like Spain and Italy, which account for nearly 25% of sales. These markets face unfavorable demographic trends, which can impact customer demand and revenue growth. Managing day-to-day operations in Europe presents challenges. Ensuring network reliability, customer service, and efficient processes requires continuous efforts.Besides operational challenges, Vodafone also faced challenges in integrating companies it acquired over the time. Vodafone has grown through acquisitions, resulting in various system landscapes and inconsistent business practices and integrating acquired companies and aligning their operations with Vodafone's global strategy is a significant challenge.
Other markets Vodafone is focusing on
The company is expanding its mobile data and payments services in Africa. Vodafone's M-Pesa, a mobile phone- based money transfer service, has been particularly successful and is a significant part of their growth strategy on the continent.Following the strategic divestitures in Italy and Spain, Vodafone is now aiming to grow in markets where it holds strong positions with good local scale. This includes leveraging opportunities with Vantage Towers and enhancing commercial performance, especially in Germany.
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