2023-12-18 11:12:00
Iliad sets the table once more. After having suffered a refusal last February from Vodafone regarding the takeover of its transalpine subsidiary, Vodafone Italia, Xavier Niel’s telecoms group is returning to the charge. This Monday, the parent company of Free in France proposed to the British telecoms giant to combine its Italian branch with its own, Iliad Italia.
Iliad’s proposal consists of merging the two operators into a new entity, “NewCo”, in order to “to establish an attractive market offering focused on innovation, growth and an unrivaled customer experience”, specifies its staff in a press release. The new group “would benefit in particular from Iliad’s innovative approach to connectivity, pricing accessibility and digital inclusion, as well as Vodafone’s expertise in the field of telecoms for businesses”he boasts.
Towards an eventual takeover of Iliad
As part of this deal, Vodafone Italia is valued at 10.45 billion euros by Xavier Niel’s group, compared to 4.45 billion euros for Iliad Italia. If Vodafone gives the green light to the operation, it “will receive 8.5 billion euros in cash and in the form of a shareholder loan”. The British telecoms giant and Iliad each own 50% of the capital of “NewCo”.
But it will not be a classic joint venture at all. Ultimately, Iliad aims to take sole control of the new entity. In fact, and as Xavier Niel’s group explains, he would have, each year, an option to purchase 10% of Vodafone. « Under the proposed transaction, Iliad would have a call option on Vodafone’s stake in NewCo, and might acquire each year a block of 10% of the share capital of NewCo at a price per share equal to the value of the shares. equity in closing »specifies Iliad.
The strong growth of Iliad Italia
In other words: one year following deal, it is indeed Iliad which would be the majority shareholder, and sole master on board, with 60% of the capital, using its purchase option. Why hasn’t Xavier Niel’s group, as previously, submitted an offer for all of Vodafone Italia? Because Vodafone would like to take advantage of“exposure to synergies” arising from the operation, entrusted to The Tribune a source close to the case. In its press release, Iliad underlines that the new entity should generate a turnover of 5.8 billion euros “for the financial year ending March 2024”with gross operating income “around 1.6 billion euros”. “It would also benefit from expected annual synergies of more than 600 million euros”he says.
The latest arrival on the Italian market, Iliad has continued to grow over the past five years. Today, it has a mobile market share of more than 10%, with 10.5 million mobile subscribers. The operator, which applied a similar strategy to France by slashing prices, more recently launched into fixed Internet, where it has less than 200,000 loyalists. Vodafone Italia has an opposite trajectory: the operator suffers from competition and price wars. Its sales fell by almost 2% during its staggered 2021-2022 financial year, to 4.4 billion euros. The group wants to let go of 1,000 jobs, or nearly one in six employees. For its part, it has a market share of more than 28% in mobile, and 16% in fixed Internet.
A green light from Brussels is not won
In case of deal, the new entity would become a particularly dangerous rival for Telecom Italia, the historic operator. But above all, it will need to get the green light from the European competition authorities. However, they remain cautious regarding national consolidation operations. In recent years, Brussels has scuttled a number of mergers, arguing that less competition often means higher prices for consumers.
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