Iliad has signed up 300,000 customers in its first month as Italy's fourth mobile operator, according to estimates from German bank Berenberg based on number porting figures. This could help the French company's share price recover further.
Iliad and its founder Xavier Niel are now active in four countries in Europe: France (Free), Switzerland (Salt), Ireland (Eir) and Italy (Iliad). The Italian operator was built with assets acquired from Wind and 3 Italia when they merged. The other three mobile operators in Italy are TIM, Vodafone and Wind Tre (50/50 owned by CK Hutchison and Veon).
First milestone within easy reach
Iliad's launch in Italy at the end of May was followed closely by the competitors, which already started launching competing offers before the official start date. Iliad's launch offer was clearly aggressive: EUR 6 per month for 30 GB (of which 2 GB in the EU) and unlimited calls and SMS (also in the EU).
The launch offer is valid for the first million customers, and the company appears on track to reach that number within a few months. Iliad expects it can reach EBITDA breakeven with a market share of less than 10 percent. That's equal to around 5 million customers, which should take a couple years to achieve. It may work to the company's advantage that Italy is still mainly a prepaid market (although Iliad's plan is a hybrid with pre-payment). It targets this group, giving it a large pool of potential customers.
European expansion
Can Niel bring his disruptive model to more European countries? The Netherlands could be a candidate, if T-Mobile and Tele2 are required to sell off assets for regulatory approval of their planned merger. Iliad could do what it's done in Italy, acquiring Tele2's physical mobile network. With an offer like the EUR 6 plan in Italy it could seriously shake up the market. Another candidate is the UK, where O2 is still for sale by Telefonica.
Share price bottomed out?
Iliad's share price has been under pressure since May 2017, when it was worth around EUR 235. Pressure on the mobile market, the response from competitors since its launch on the French mobile market in 2012 and disappointing results in Q1 2018 have sent the share price down to just over EUR 130. Since the start of 2018 alone, the stock is down 31 percent, compared to falls of 21 percent for Vodafone, 16 percent for CK Hutchison and 13 percent for TIM. Only Veon is doing worse than Iliad, with a drop of 38 percent.
In recent days, Iliad's share price has turned higher, suggesting Berenberg already released its report to customers earlier, before it reached the Italian press. Investors may also be getting in early ahead of an expected recovery in results at the company in the coming quarters.
