Vodafone exits Italy in final step in CEO's growth plan

Vodafone's shares, down 46% in the last two years, rose 3.7% to 69 pence, giving the company a market value of 18.7 billion pounds ($23.8 billion). "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.

Vodafone CEO Margherita Della Valle said on Friday she was "changing the face" of the British mobile operator by selling its Italian unit to Swisscom, the final step in her plan to retrench to markets where the company can profitably grow. Vodafone's long-suffering shareholders will receive 4 billion euros ($4.4 billion) via share buybacks from the Italian sale and a deal agreed last year to exit Spain.

But they will see their dividend payout halve from the financial year starting next month to 4.5 euro cents a share, reflecting the lower cash flow from the smaller footprint. Vodafone's shares, down 46% in the last two years, rose 3.7% to 69 pence, giving the company a market value of 18.7 billion pounds ($23.8 billion).

"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. Investors in Vodafone, the mobile group that expanded across Europe and Africa in the first decade of the century, have been promised better growth for years.

But it has struggled against new rivals in Spain and Italy that have slashed tariffs, and strategic mistakes in its largest market, Germany. Della Valle replaced the boss of Germany, Philippe Rogge, with Vodafone UK's Ahmed Essam in the new role of Executive Chairman of Germany and Chief Executive European Markets on Friday.

Vodafone will receive 8 billion euros in cash from the Vodafone Italy deal, the last of three markets Della Valle vowed to tackle less than a year ago. It agreed last year to sell its Spanish operation to Zegona Communications and merge its British unit with Hutchison's Three UK, leaving it focused on Germany, smaller European countries, Africa, and business.

"Our reshaped footprint will allow us to generate good returns, with an immediate return on capital step up of over one percentage point when the Italian and Spanish transactions complete," Della Valle told reporters. It will return 4 billion euros of the proceeds from both deals via share buybacks and would target a new debt leverage range of 2.25x–2.75x versus the current objective of 2.5 times net debt/adjusted EBITA after leases.

Chief Financial Officer Luka Mucic said he would target the lower half of the range. 

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