The French Iliad is bidding for Vodafone’s Italian business


French telecoms group Iliad said it had made an offer to buy Vodafone’s Italian business in a bid to consolidate the competitive market in Europe’s third-largest economy.

If the offer goes through, it would test regulators’ views on reducing the number of telecoms operators from four to three within a country, which they had previously pushed in Denmark in 2015 and the UK in 2016 over concerns it would would dampen competition and harm consumers. The amount of the offer was not disclosed.

Bloomberg News first reported the news of the offering. Vodafone declined to comment.

Founded by French billionaire Xavier Niel, Iliad entered the Italian mobile market in 2018 with its first foray outside of its home country. Since then it has invested heavily in building a network and trying to woo customers with simpler and often cheaper offers than those of its competitors.

According to the Italian regulator Agcom, the group is still the smallest mobile operator in Italy with around 8 percent market share compared to Vodafone with 28 percent. It has recently started selling broadband services as well, but is still small in that segment.

Niel took Iliad private last year in part because of frustrations that public market investors were undervaluing the company. Iliad has also become more acquisitive in recent years, having completed transactions to acquire first a mobile operator and then a cable broadband operator in Poland.

It remains to be seen whether Vodafone will accept the offer. The UK-listed group has come under pressure from activist investor Cevian Capital to restructure its portfolio, improve performance in key markets and refresh its board in a bid to revive its slumping share price.

A second activist investor, Coast Capital Management, has also taken an undisclosed stake in Vodafone and has held talks with its leadership. The New York-based fund’s founder, James Rasteh, told the Financial Times that he was “very supportive of Vodafone’s management” and that he should be given time to make changes, including considering consolidation options.

When asked what he thought of the Iliad offering, he said: “Sector consolidation makes a lot of sense and tends to create value as both a buyer and a seller. But we leave it up to management to make the right choice.”

Vodafone boss Nick Read told the FT earlier this month that the group is working on several fronts, including exploring options to consolidate European markets and boosting the value of Vantage Towers, the cell tower business spun off last year. He said Vodafone was “active on multiple fronts” and focused on “combinations, more than mere purchases” from competitors.

Italy is Vodafone’s third largest market in terms of revenue after Germany and the UK. The country achieved 4.5 billion euros in sales or around 12 percent of group sales and 1.6 billion euros in earnings before interest, taxes, depreciation and amortization or 11 percent of group sales in the 12 months to the end of March 2021.

Vodafone shares closed largely unchanged on Tuesday.

Additional reporting by Anna Gross


Comments are closed.