The potential sale of Vodafone's Italian unit to Swisscom reflects consolidation efforts within the telecommunications industry.

British telecommunications giant Vodafone is currently engaged in advanced negotiations to sell its Italian unit to Swisscom, a leading telecommunications provider based in Switzerland. The preliminary price under discussion stands at eight billion euros ($8.7 billion), as announced by both companies on Wednesday.

Vodafone, which had previously turned down offers from Xavier Niel's Iliad group, emphasized that it had extensively explored market consolidation opportunities in Italy. However, it believes that the potential transaction with Swisscom offers the most favorable combination of value creation, upfront cash proceeds, and transaction certainty for its shareholders.

Vodafone's decision to engage with Swisscom comes after rejecting a merger proposal from Iliad last month, which valued Vodafone Italy at 10.45 billion euros. This rejection followed an earlier offer of 11.25 billion euros from Iliad and private equity group Apax Partners in February 2022.

Vodafone recently reported a 2.3 percent decline in third-quarter revenues to 11.4 billion euros, citing underperformance in Italy and Spain. In late 2023, Vodafone's CEO, Margherita Della Valle, announced the sale of its Spanish division to investment fund Zegona for up to five billion euros. This move followed a strategic decision in the previous year to reduce costs by cutting 11,000 jobs, representing over 10 percent of Vodafone's global workforce.

The potential sale of Vodafone's Italian unit to Swisscom reflects the ongoing consolidation efforts within the telecommunications industry, with both the companies aiming to capitalize on strategic opportunities while navigating regulatory scrutiny and market dynamics.