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Vodafone chief executive says retrenchment plan complete with Italian sale

Irish business has been lossmaking in recent years – will that become an issue at the top of the firm?

Vodafone is selling its Italian business.

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Cantillon
Sat Mar 16 2024 - 06:00

Eir owner Xavier Neil has missed out on Vodafone Italia, after the billionaire’s investment firm Iliad was beaten out by Swisscom, which will pay €8 billion for the business.

The Frenchman’s firm had long been mentioned as a possible buyer for the company but no doubt Mr Neil will be able to dust himself down and move on to the next deal – it’s the way the industry works, after all.

The sale continues Vodafone’s overall retrenchment. It’s more than a decade since it sold its stake in US operator Verizon and cashed out of France by offloading its holding in SFR. But under chief executive Margherita Della Valle that process has, if anything, accelerated.

Since taking over last year, Della Valle has refocused Vodafone on to markets where it can clearly grow its profitability, and has sought to sell businesses where that isn’t possible. To that end the company has sold out of Spain and has followed it with the Italian deal.

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“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,” Della Valle said on Friday.

The Italian sale is nominally the last step in the current plan, but one does wonder where it might leave the Irish business in the years ahead.

The business here lost €21.8 million on an operating basis in the 12 months to the end of March last year, while revenue increased 5 per cent to €981 million amid higher costs. Mobile telecoms is a relatively low margin business in a lot of places these days, as other operators and so-called virtual networks continually offer what appear to be cheaper deals on phones and plans. If Della Valle is as ruthlessly focused on “predictable, stronger growth” as she says is, then it is easy to wonder where that would leave the Irish operation.

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