The share price of Vodafone Group PLC (GB:VOD) gained over 6% after France-based telecom firm Iliad SA proposed a merger of its Italian business with Vodafone Italia. Iliad valued Vodafone Italia at €10.45 billion. The news comes a month after Vodafone announced that it was exploring options for its Italian business, as the market is struggling with lower revenues and margins and competition is intense.
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In the first half of FY24, Vodafone’s Italian business generated a service revenue of around €2 billion, experiencing a year-on-year organic decline of 1.3%. The company is looking to consolidate its business in markets where it is not achieving satisfactory performance.
Vodafone is a European telecommunications company that provides a range of services, including voice, messaging, and internet connectivity for both fixed and mobile networks.
More Details About the Proposal
According to the proposal, Vodafone and Iliad will each get a 50% stake in the new business. Further, Vodafone would get €6.5 billion in cash and an additional €2 billion in a shareholder loan, aimed at ensuring “long-term alignment.” On the other hand, Iliad will receive €500 million in cash, a €2 billion shareholder loan, and the option to acquire an additional 10% every year from Vodafone at a mutually agreed price.
According to the proposal statement, the combined business is anticipated to generate revenues of approximately €5.8 billion and EBITDA (after leases) of around €1.6 billion in the financial year ending in March 2024.
The deal proposal is in the early stages, and there is no certainty regarding final approval.
Is Vodafone a Good Share to Buy?
According to TipRanks, VOD stock has received a Hold rating based on a total of 10 recommendations. The average price forecast is 99.10p, with a high forecast of 165p and a low forecast of 68p. The Vodafone share price target implies an upside of 44.8% on the current trading levels.
