Vodafone has confirmed that it has sold its operation in Italy for €8bn (6.8bn) to Swisscom.

The sale is part of a revamp of the firm’s operations on the continent, after selling its Spanish firm to Zegona Communications for £4.37bn in October and a potential merger with Three, which is currently under investigation by the Competition and Markets Authority.

Talks over the potential takeover began last month, with the telecoms group stating that it had "engaged extensively with several parties to explore market consolidation in Italy", believing that a transaction with Swisscom "delivers the best combination of value creation, upfront cash proceeds and transaction certainty for Vodafone shareholders".

Group chief executive at Vodafone, Margherita Della Valle, said: "Today, I am announcing the third and final step in the reshaping of our European operations. Going forward, our businesses will be operating in growing telco markets - where we hold strong positions - enabling us to deliver predictable, stronger growth in Europe. This will be coupled with our acceleration in B2B, as we continue to take share in an expanding digital services market.

"The sale of Vodafone Italy to Swisscom creates significant value for Vodafone and ensures the business maintains its leading position in Italy, which has been built through the dedicated commitment of our colleagues to serving our customers over many years.

"Our transactions in Italy and Spain will deliver €12bn of upfront cash proceeds and we intend to return €4bn to shareholders via buybacks, as part of our broader capital allocation review."

Following the sale, Vodafone, from 1 April 2024, will be changing its organisation to better execute on our strategic priorities within the new footprint.

The company will organise itself into five business divisions, Germany, European markets, Africa, Vodafone business and Vodafone investments, with changes across the structure of the Vodafone group executive committee.

Investment director at AJ Bell, Russ Mould, added: "This deal may not be the full stop Vodafone hopes it will be. Earlier steps included the sale of its Spanish arm and a merger of its UK operations with Three – but that merger is being probed by UK competition authorities which have been primed to bear their teeth in recent times.

"On a 10-year view the shares are down nearly 70% but if you factor in the total return including dividends this adds up to a slightly less depressing (but still sour tasting) 24% loss.

"The rebased payout will ramp up the pressure for Vodafone to deliver consistent growth from its streamlined operations, otherwise the position of CEO Margherita Della Valle will come under greater scrutiny. Much will depend on its ability to turn things around in its largest market Germany, with very little for the company to hide behind now if it fails to deliver."

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