Vodafone has struck a deal with Swisscom to sell its Italian business for €8 billion.

The company's group chief executive Margherita Della Valle said the move was its "third and final step" in the reshaping of its European operations after selling its Spanish unit for €5 billion last year.

Following the sale of Vodafone Italy and Vodafone Spain, together with the merger of Vodafone UK and Three UK, the telecoms giant says it will now focus its operations in Europe on "growing markets, where [it] holds strong positions with good local scale".

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

The Swiss telecoms firm said that the move would bring together complementary mobile and fixed infrastructures across Vodafone Italia and its existing Italian subsidiary Fastweb.

It says the increased scale, along with a more efficient cost structure and annual run-rate synergies of €600 million, will enable the combined entity to sustain investments in the Italian telecommunication market and offer “innovative, competitively priced converged services”.

The business went on to say that the buyout was a key part of its plan to achieve profitable growth in Italy.

The combined entity and Vodafone Group will enter into several transitional and long-term service agreements, including a brand license agreement, which permits the use of the Vodafone brand in Italy for up to five years post-closing.

Vodafone will provide certain services for an initial total annual service charge of €350 million, which is expected to decrease over time.

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