Proactive Investors - Vodafone Group PLC (LON:VOD) said it is in exclusive discussions with Swisscom about a cash sale of its Italian arm.
The debt-laden telecoms group admitted in December that it was exploring options for Vodafone Italia and rumours have suggested Swisscom was the leading candidate, as it owns broadband provider Fastweb in the country.
Today, Vodafone confirmed the pair currently are talking about Swisscom potentially buying Vodafone Italy for a total enterprise value of €8 billion (£6.8bn) excluding debt and cash.
If the deal is completed at this price, it would represent a price of 26 times forecast free cash flow and 7.6 times underlying earnings.
But it is lower than the €10.45 billion value that was suggested as part of a merger of the Italian business with that of Paris-based telco Iliad last year, although this involved only a €6.5 billion cash payment.
"Vodafone has engaged extensively with several parties to explore market consolidation in Italy and believes this potential transaction delivers the best combination of value creation, upfront cash proceeds and transaction certainty for Vodafone shareholders," he FTSE 100-listed company said today.