Vodafone slims further: exits Switzerland

Vodafone continued its pre-Christmas diet on Tuesday with the announcement that it has agreed to sell its 25 per cent interest in Swisscom Mobile back to Swisscom for a cash consideration of £1.8bn.

The news did not come as much of a surprise. Analysts began speculating that the UK-based operator would offload its Swiss assets in the wake of its exit from Belgium. Vodafone decided to sell its 25 per cent stake in Proximus to Belgacom for a total of £1.35bn in August.

Vodafone’s strategy has been to shift its focus away from mature markets where it holds a minority stake to developing ones, in a bid to combat its stagnating subscriber revenues.

The operator flogged its majority holding in the struggling Vodafone Japan earlier this year and also exited Sweden in 2005.

But this latest move is also likely to put Vodafone’s much debated position in the US under an even more intense spotlight. However, the operator’s position on its 45 per cent US holding is less clear cut. The company has long maintained the long term nature of its existing Vodafone-Verizon relationship, although many industry watchers still think that at the right price Vodafone might exit the US.

Under the deal, Vodafone and Swisscom Mobile have signed a revised long term partner agreement in Switzerland with an initial five year term. Under the deal Swisscom Mobile and Vodafone customers will continue to benefit from Vodafone’s products and services such as Vodafone live!, Blackberry from Vodafone and international roaming, including preferred roaming arrangements.

The deal will leave Swisscom as the 100 per cent owner of Swisscom Mobile, the leading mobile operator in Switzerland.

The move fits Swisscom’s only expansion strategy in the wake of the government’s recent rejection of Swisscom’s privatisation and its insistence that Swisscom should not invest in foreign operations.

Swisscom has been at loggerheads with the state since last year when the government decided it would offload its 66.1 per cent holding in Swisscom. The government instructed its representatives on the board to vote against possible foreign acquisitions, instead encouraging the distribution of free capital to shareholders. As a result Swisscom is only allowed to make restricted acquisitions abroad.

The operator has repeatedly stated the need for a complete or partial disposal of the government stake as the only viable option for the future development of Swisscom.

Commenting on the Swiss transaction, Arun Sarin, chief executive of Vodafone, said: “We do not, however, see ourselves as the most appropriate holder of this minority stake in the longer term and Swisscom is keen to increase its holding in Swisscom Mobile to drive through synergies in its fixed and mobile businesses. It therefore makes sense to sell our stake now for an attractive price”.