Vodafone Engages in Italy Deal Talks Amid German Economic Slump

10 Feb, 2024

Vodafone Engages in Italy Deal Talks Amid German Economic Slump

Vodafone announced on Monday its active engagement in discussions concerning a potential deal in Italy, a market where it has faced notable challenges, while simultaneously noting a deceleration in growth in its largest market, Germany, during the third quarter. The British telecom giant recently turned down a merger offer from Iliad in Italy, opting instead to explore alternative avenues. Reports suggest Vodafone is in talks with Fastweb, the Italian unit of Swisscom, after previously finalizing deals like the merger with Three in Britain and divestiture of its Spanish operation.

CEO Margherita Della Valle confirmed the ongoing negotiations in Italy, emphasizing Vodafone's commitment to value creation through strategic decisions. Despite achieving a 4.7% service revenue growth in the third quarter, consistent with the previous period, challenges persisted, particularly in Italy where service revenue decreased by 1.3%. The German market experienced a slowdown, attributed by Della Valle to one-off benefits in the preceding quarter, although she highlighted promising commercial performance trends.

Vodafone's stock, which has declined by 25% over the past year, saw a 1.2% dip in early trading following the announcement. Analysts at Citi expressed cautious optimism, noting the expected performance alignment with previous projections. Last month's disclosure of ongoing discussions in Italy, particularly with Swisscom, underscores Vodafone's pursuit of strategic partnerships. The company reaffirmed its full-year guidance, anticipating stable adjusted core earnings of approximately 13.3 billion euros and free cash flow of around 3.3 billion euros.