Vodafone to sell Italian operations to Swisscom for €8bn

The UK-listed telecoms firm said it had been engaged in talks with several parties to explore market consolidation in Italy, but it was now in "exclusive discussions" with Swisscom.

The move comes after Vodafone confirmed in December that it was looking at options for "in-market consolidation" in Italy – a market where it said it was "not achieving appropriate returns on invested capital".

A deal, which is still subject to confirming binding transaction documentation, will "deliver the best combination of value creation, upfront cash proceeds and transaction certainty for Vodafone shareholders", Vodafone said in a statement on Wednesday.

The €8bn deal, which is on a debt and cash free basis, values Vodafone Italy at 7.6 times estimated EBITDA after leases, and 26 times operating free cash flow.

Vodafone Italy, which accounts for 11% of Vodafone's group services revenues, generated €2.32m in total revenue in the company's first fiscal half ended 30 September.

"There can be no certainty that any transaction will ultimately be agreed. If required, a further announcement will be made when appropriate," the company said.