Vodafone has completed the long-awaited sale of its Italian unit as part of a strategy to streamline the business and boost profitability.
Southern Europe has been a laggard for Vodafone, and the €8bn disposal will be a relief for investors looking forward to maximising returns from stronger regions, such as the UK and Africa.
“The sale of Vodafone’s Italian business is intended to mark the final step of its European restructuring and to get the company back on a firm financial footing,” said Russ Mould, investment director at AJ Bell.
Vodafone will return €4bn to shareholders through share buybacks. Investors cheered the news and Vodafone shares jumped 4.6% on Friday.
“The telecoms are unlikely to ever shoot the lights out when it comes to growth, but the reliable nature of their revenue and high barriers to entry make shareholder returns one of the core attractions of these stocks,” said Sophie Lund-Yates, lead equity analyst, Hargreaves Lansdown.
“Vodafone’s Italian business has been struggling, so shedding this weight should help the group refocus and the division’s been up for sale for a while. Attention will now turn to how effectively Vodafone uses its resources to fix wider challenges, including high debts, costs and some increasing competition.”