LONDON. Telecoms companies Vodafone and Iliad are in talks to reach a business merger agreement in Italy. Citing Reuters on Sunday (23/1), both sides are actively studying ways to achieve business ties in Italy.
If successful, the deal would create a telecommunications giant with a mobile market penetration of around 36 percent and combined revenues of nearly 6 billion euros, equivalent to $6.80 billion.
According to a Reuters source, this deal is uncertain. However, the Iliad has reportedly appointed investment bank Lazard to its strategic plan in Italy. The company will debut wireline broadband in Italy on January 25.
The proposed merger of the two companies needs the approval of the Italian government and European antitrust regulators. Previously, antitrust regulators had opposed several merger attempts in Europe, including Three’s takeover of Britain’s O2 in 2016.
Vodafone has an annual revenue of around 5 billion euros in Italy and a market penetration of 28.5% among mobile subscribers, according to Italian communications watchdog AGCOM.
In contrast, the Iliad is much smaller with an Italian unit reporting annual revenue of 674 million euros in 2020 and a mobile market share of around 7.7%, according to AGCOM. But the company fared well during the pandemic, with third-quarter sales up 21% to 207 million euros in 2021.
The Iliad, led by billionaire founder Xavier Niel, has been reviewing options to expand the market further in Italy in recent months. The Iliad is seeking to take advantage of merger fever in Italy’s telecommunications industry to accelerate consolidation and stop a price war that has slashed margins.
The telecommunications industry has repeatedly urged to pursue four to three telecommunications mergers that could unlock cost synergies and increase margins by cutting the number of existing mobile operators in Italy, namely TIM, Vodafone, WindTre and Iliad.
Italy’s Iliad boss Benedetto Levi said on January 13 that the French company was open to buying rival operators. Earlier, Vodafone boss Nick Read said on November 17 that consolidation was needed in Europe, particularly in Italy, Spain and Portugal where all players suffer.