Vodafone rejects Iliad’s bid to merge Italian businesses

UK-based telecoms group rebuffs Eir owner’s revised offer but says ‘discussions with others’ will continue

Vodafone has rejected Eir owner Iliad’s proposal to merge their Italian businesses, according to the French telecoms company, about two years after the UK-based group rebuffed a previous bid of more than €11 billion.

In a statement on Wednesday, Iliad said it submitted a revised offer since going public with its first in December, but the FTSE 100 company failed to accept it.

The revised proposal removed call options for Iliad, which would have paved the way for it to take control of the combined operations in the coming years. It also slightly increased the cash proceeds Vodafone would receive to €6.6 billion, up from €6.5 billion, while nudging down Iliad’s to €400 million from €500 million.

Both companies would still each have received a €2 billion shareholder loan and 50 per cent of the new business. Iliad continued to value Vodafone Italia at €10.45 billion.


Iliad, which has operations in France, Italy and Poland, has been clear about its ambitions to expand its business, with opportunities in Italy a particular focus.

On Wednesday, Iliad said it was “confident that the offer presented was the best possible business combination to benefit a struggling Italian market and telecommunications industry”.

Meanwhile, Vodafone’s chief executive Margherita Della Valle, who first took over on an interim basis last January, has pledged to focus on simplifying the telecoms group and to pursue deals in European markets that are not earning above their cost of capital.

In a statement on Wednesday, Vodafone said it was “no longer in talks with Iliad, but our discussions with others continue”.

In response to Iliad’s first public offer in December, the UK-based group said it was “supportive of in-market consolidation in countries where it is not achieving appropriate returns on invested capital” and confirmed it was “exploring options with several parties to achieve this in Italy, including through a merger or a disposal”.

Shares in Vodafone declined almost 4 per cent in morning trading on Wednesday and have fallen more than 28 per cent in the past year.

An earlier bid from Iliad in 2022 was also rejected after Vodafone said it was “not in the best interests of shareholders”. In the same year, Iliad’s billionaire founder Xavier Niel acquired a 2.5 per cent stake in Vodafone through his investment vehicle Atlas Investissement.

Vodafone has also held informal talks about a potential merger or partial disposal of assets with Swisscom-owned Fastweb, according to people close to the two companies. It did not immediately respond to a request for comment.

A potential merger between Vodafone Italia and Fastweb would create a highly competitive group in the business services segment, analysts said. Fastweb has a 34 per cent market share in the enterprise segment and is a leading supplier of internet technology to the public sector. The company does not have its own mobile network.

Iliad first entered Italy in 2018 as a low-cost challenger to Italy’s established mobile carriers, sparking a price war that put pressure on existing players including Telecom Italia (TIM), the former state monopoly.

In the first three months of last year, Iliad was the fourth mobile player in Italy, with a market share of 9.2 per cent, based on the total number of sim cards, according to data from Italy’s telecoms regulator AGCOM. A merger with Vodafone, the country’s second-largest operator after TIM, would have made the group Italy’s largest.

TIM last year announced it would split its business and sell its prized network to private equity group KKR in an effort to reduce its debt. The move, according to analysts, is likely to trigger further consolidation in the crowded telecoms market in Italy.

Since becoming chief executive, Della Valle has announced the sale of Vodafone’s Spanish business for up to €5 billion to a fund founded by two former Virgin Media executives in October, and a proposed domestic merger with CK Hutchison’s Three UK in June.

The UK competition regulator launched its formal investigation into the plan last week. The UK government last week also said that a stake in Vodafone held by its largest shareholder, Emirates Telecommunications, which is also known as e&, was a national security risk and ordered the companies to take steps to mitigate it. – Copyright the Financial Times Limited 2024