Swisscom will repurchase a 25 per cent stake in Swisscom Mobile from Britain's Vodafone Group for 4.25 billion Swiss francs ($3.5 billion).
The debt-financed purchase, which is more costly than analyst expectations of around 3.5 to 3.75 billion francs, will boost Swisscom's annual profit by around 180 million francs starting in 2007, Swisscom said today.
The deal will enable the former monopoly Swisscom, which is still majority held by the government, to strengthen its domestic position after the government blocked foreign takeovers. For Vodafone, the proceeds will allow it to reduce debt.
Vodafone said it expected to record a gain on the sale of approximately £100 million($195 million) for the year ending March 31st, 2007.
It said the deal would not materially affect its mobile revenue and profit margin outlooks for this financial year.
The transaction will be fully debt financed and is expected to be completed on December 20th.
Vodafone acquired the 25 per cent holding in Swisscom Mobile in March 2001 for 4.5 billion francs.