M&A Deal Snapshot

Swisscom / Vodafone Italia: Doubling down on Italy

Swisscom paid EUR 8 billion for Vodafone Italia and merged it with Fastweb to create Fastweb + Vodafone. We read the industrial logic, the debt-funded structure and the synergy case.

Announced 15 March 20243 min readM&A

SwisscomVodafone
The one-page editionDownload the SnapshotPDF · A4 · Mar 2024
  • EUR 8bnPrice, cash- and debt-free
  • 100%Debt-financed
  • EUR 600mAnnual synergies targeted from 2029
  • EUR 2.4bnCombined EBITDA
David BaburiHead of Research, Valstron
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Key takeaways

  1. Swisscom acquired 100% of Vodafone Italia for EUR 8 billion on a cash- and debt-free basis, paid in cash and fully financed with debt.
  2. Combined with Fastweb, the business has around EUR 7.3 billion of revenue and EUR 2.4 billion of EBITDA, and targets annual synergies of about EUR 600 million from 2029.
  3. The deal closed on 31 December 2024 after Italian approvals. The combined company operates as Fastweb + Vodafone.

The transaction

BuyerSwisscom, via Fastweb
SellerVodafone Group

Result Fastweb + Vodafone

Key terms
Announced15 March 2024
SellerVodafone Group
PriceEUR 8 billion, cash- and debt-free
Consideration100% cash, fully debt-financed
FinancingCHF 1.15bn Swiss bonds, EUR 4bn Eurobonds, EUR 3bn bank loan
Bridge replacedEUR 5.1 billion syndicated bridge loan
ApprovalsItalian competition authority and ministry, December 2024
Completed31 December 2024
Combined businessc. EUR 7.3bn revenue, c. EUR 2.4bn EBITDA
Synergiesc. EUR 600 million a year from 2029

Timeline

  1. 15 Mar 2024Binding agreements with Vodafone Group
  2. May 2024Financing completed ahead of plan
  3. Dec 2024Italian approvals received
  4. 31 Dec 2024Acquisition completed; Fastweb + Vodafone launched

The rationale

Fastweb is strong in fixed broadband and Vodafone Italia in mobile. Together they form a converged operator that can sell fixed and mobile services as one bundle, and the second-largest telecoms provider in Italy behind TIM.

For Vodafone the sale was part of a broader reshaping of its European portfolio.

For Swisscom, Italy offers growth that its mature home market cannot. Fastweb has been its main foreign business since 2007.

The assessment

Leverage

Paying entirely with debt kept shareholders undiluted but raised leverage at a company valued for stable dividends. Financing closed ahead of schedule, with coupons of 3.5% to 3.875% on the euro bonds.

Synergies

EUR 600 million a year is about a quarter of the combined EBITDA of EUR 2.4 billion. Delivering it matters more than the price paid.

Risks

Italy's mobile market is intensely price-competitive, and networks and IT have to be combined. Around completion, Swisscom lowered its 2024 EBITDA guidance to CHF 4.3 to 4.4 billion.

What to watch

The synergy path to 2029, net debt reduction, and Fastweb + Vodafone's share of combined fixed and mobile customers.

Financing mix (bn)
4.0Eurobonds EUR3.0Bank loan EUR1.15Swiss bonds CHF

Source: swissinfo.ch (Keystone-SDA), May 2024.

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