Vodafone and Iliad are in talks to reach a deal intended to merge their respective units in Italy, reports Reuters, citing unnamed sources close to the negotiations. If they reach an agreement, the combined company would be the country’s leading mobile operator, with around 36 percent of the market and revenues of nearly EUR 6 billion.
The news comes a day before Iliad is due to unveil its fixed line offer and follows comments from its Italian CEO Benedetto Levi indicating that the company was open to buying a rival operator. "If a company, as a whole or in part, becomes available on the market we will consider it without any preconception," he told business daily Il Sole 24 Ore earlier this month.
According to a source cited in the Reuters report, Iliad is working with investment bank Lazard on its strategic plans in Italy. Iliad, Vodafone and Lazard have yet to comment on the report, which cautions that a deal is not certain.
Iliad reached the milestone of 8 million mobile customers in the third quarter of 2021, equivalent to around 10 percent of Italy’s human SIMs, having posted revenues of EUR 674 million in 2020. It struck wholesale deals with Open Fiber and FiberCop in July 2020 and August 2021 to prepare for its fixed line debut and posted third quarter 2021 sales up 21 percent year on year to EUR 207 million, having weathered the Covid pandemic far better than its rivals.
Italian operators 'suffering' - Nick Read
Vodafone Italia’s annual revenue is far higher at around EUR 5 billion, while its market share of human SIMs stands at 23.3 percent (28.5% including M2M lines), according to the latest Q3 2021 figures from communications regulator Agcom. At the end of last year, Vodafone CEO Nick Read called on more European operators to consolidate to better compete and invest in network upgrades, above all in Italy, Spain and Portugal, where he said "all players are suffering."
Clearly, any merger between Vodafone and Iliad in Italy would need to be approved by the government, which regards the country's telecommunications infrastructure as a strategic national asset, as well as by the EU’s antitrust regulators.
If cleared, the deal would reduce the number of MNOs in Italy from four (TIM, Vodafone, WindTre and Iliad) to three around five years after Iliad was allowed to enter the market following the merger of Wind and 3 Italia.
