Advertisement
OPINION

Updated February 28th, 2024 at 22:44 IST

Vodafone’s Italy exit puts speed before valuation

French rival Iliad, but fewer antitrust hurdles mean Vodafone has bigger chance to access deal proceeds.

Reuters Breakingviews
Lisa Jucca
Vodafone rejects Iliad merger in Italy to pursue rival deals
Vodafone rejects Iliad merger in Italy to pursue rival deals | Image:Vodafone
Advertisement

Fast lane. Margherita Della Valle looks set to prioritise speed over valuation. The boss of $24 billion British telco Vodafone seems to like Swisscom’s 8 billion euro ($9 billion) offer for its hard-pressed Italian business. The price tag is lower than a previous offer by French rival Iliad, but fewer antitrust hurdles mean Vodafone has a bigger chance to access the deal proceeds rapidly.

The all-cash offer from $30 billion Swisscom comes just a month after Della Valle rebuffed Xavier Niel’s second attempt to get hold of Vodafone Italy. Iliad’s bid, which valued the Italian business of Vodafone at 10.45 billion euros including debt, was on paper higher. Swisscom’s bid is around 7.6 times Vodafone’s adjusted EBITDA after lease payments and some charges for the year to March 2024, which analysts see at around 1.05 billion euros. That’s less than the nearly 10 times multiple of Iliad’s offer on the same metric, Breakingviews calculations show.

Advertisement

Yet Iliad’s bid, which aimed to merge the two companies’ Italian operations, was fuzzier. It offered Vodafone cash proceeds of around 6.5 billion euros and a shareholder loan of 2 billion euros. Swisscom’s bid involves an upfront 8 billion euro payment for a full sale.

The biggest appeal, however, lies in the lack of antitrust headaches. Swisscom operates in Italy through fixed-line operator Fastweb, which has a relatively small mobile phone business. That should provide a speedier antitrust approval, avoiding the lengthy scrutiny and onerous conditions that slowed the Spanish tie-up of Orange and MásMóvil.

Advertisement

By exiting Italy, Della Valle would also advance her goal of executing fast deals to make her company less sprawling. Investors had punished the hesitancy of Della Valle’s predecessor Nick Read, and her rejection of Iliad’s offer might have made them think history was repeating itself. With Vodafone shares down 20% from when Della Valle took office in early January 2023, there’s a case to be made for not hanging around.

Advertisement

Published February 28th, 2024 at 22:44 IST

Your Voice. Now Direct.

Send us your views, we’ll publish them. This section is moderated.

Advertisement
Advertisement

Trending Quicks

PBKS vs RR
a few seconds ago
Two prisoners facing trial under POCSO act escape from Odisha jail
2 minutes ago
17 Indians Among Crew of Ship Detained by Iran Near UAE
3 minutes ago
Sydney policewoman's heroic act
6 minutes ago
Harman Baweja producing film on Nazir Wani
6 minutes ago
Sydney Mass Stabbing Incident Live updates
12 minutes ago
Rohit Sharma and Hardik Pandya
13 minutes ago
PM Modi plays online games with gamers
15 minutes ago
amit shah
25 minutes ago
Rutuja Bhosale
25 minutes ago
A 'Barack Obama' gas station in Ireland has gone viral
30 minutes ago
Advertisement
Advertisement
Advertisement
Whatsapp logo