By Ian Walker

 

Vodafone Group said it is exploring merger or disposal options for its Italian business with several parties as it focuses on right-sizing the company's portfolio for growth.

The FTSE 100-listed telecom company was responding to the statement earlier Monday by Iliad Group to merge their Italian businesses in a deal that values Vodafone Italia at 10.45 billion euros ($11.38 billion).

"Consistent with its previous statements, Vodafone is supportive of in-market consolidation in countries where it isn't achieving appropriate returns on invested capital and confirms it is exploring options with several parties to achieve this in Italy," the company said.

It added that there is no certainty a deal will be agreed.

As part of a plan to right-size its portfolio the company has already agreed the sale of its Spanish unit and merged Vodafone U.K. and Three U.K.

Earlier Monday, European telecom company Iliad said it was planning to create a new company jointly owned with Vodafone that will combine their Italian businesses.

Iliad said the proposal has the support of its board and main shareholder Xavier Niel.

Under the proposal, Vodafone would get EUR6.5 billion in cash and a EUR2.0 billion shareholder loan. Vodafone's share of the new business would be worth EUR1.95 billion, Iliad said.

The company said it would get EUR500 million in cash and a EUR2.0 billion shareholder loan. It would also have the option to buy 10% of the joint venture from Vodafone every year at an agreed price at the time.

The merged business is expected to generate revenue of EUR5.8 billion and earnings before interest, taxes, depreciation and amortization after leases of EUR1.6 billion for the fiscal year ending March 2024.

Vodafone shares at 1029 GMT were up 4.36 pence, or 6.7%, at 69.08 pence and are leading the FTSE 100 index risers. Shares are currently down 18% over the year to date.

 

Write to Ian Walker at ian.walker@wsj.com

 

(END) Dow Jones Newswires

December 18, 2023 06:09 ET (11:09 GMT)

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