Vodafone sells Swiss firm holding

Vodafone has been selling off its non-core assets

Mobile phone giant Vodafone has sold its 25% stake in Swisscom Mobile for 4.25bn Swiss francs (£1.8bn).

The proceeds of the sale, which will lead to a one-off £100m gain in profits for the current financial year, will be used to reduce Vodafone's debts.

Vodafone said the deal would have no material effect on mobile revenues, but it would no longer receive an expected £100m of dividends from Swisscom.

Vodafone also signed a new five-year deal with Swisscom for its services.

Under the new contract, Vodafone will continue to supply its global products and services, including its Vodafone Live third-generation service and international roaming services.

Tough market

Swisscom - which is 58% owned by the Swiss government - is battling increased competition and a drop in prices, making it hard for the firm to grow in its home market.

The deal is expected to boost Swisscom's annual profit by about 180m francs ($147.4m; £75.3m a year from 2007.

Meanwhile, Vodafone has been keen to pull out of markets with limited long-term commercial benefit.

In August, it sold its 25% stake in the Belgian mobile phone business Proximus to Belgacom for 2bn euros (£1.4bn).

Last year, it sold its Japanese business for £8.9bn.

In November, Vodafone unveiled a £3.3bn half-yearly loss as it was hit by higher interest rates, competition and some of its assets being worth less than it thought.