If the two operations of more than 10 billion euros each end, the transalpine market will be deeply reconfigured.
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The fifteen members of Telecom Italia’s board of directors play under pressure. Reunited on Monday, February 14, to study a set of splitting the fixed network of the telecommunications operator, a regular idea mentioned in recent years but constantly repulsed, the administrators must deal with unprecedented agitation for the sector. While the former historical operator has itself the object, since November 2021, a project of takeover bid of the American investment fund KKR, French Iliad, number four of Italian telecoms, S ‘ is launched at the assault of the number three, Vodafone. Two operations of more than 10 billion euros each, which, if they result, will reconfigure the transalpine market and could be followed by replicas in other equally competitive European markets, such as Spain or France.
Thursday, February 10, Vofadone rejected the 11.25 billion euro proposal formulated by Iliad for its Italian subsidiary. This “brand greatly preliminary and non-firm interest”, as described by the British telecom operator in a brief statement, “is not in the best interest” of its shareholders. But at no time does Vodafone say that its Italian subsidiary is not for sale. The British even recognizes “continue to pragically pursue several possibilities for consolidation (…) in its main European markets, including Italy”. For his part, Iliad “took note” of the refusal and ensures that he will now “continue his autonomous strategy” on the Italian market. Usual statements in business diplomacy.
“The arrival of Iliad, Italy, in 2018, is at the origin of the 30% drop in three years of the operating profit of Vodafone in this market. Difficult for the group to accept the First proposal coming, which is at a price at the bottom of the range of estimates, “says a shareholder from the British operator. According to Barclays Bank analysts, Vodafone’s Italian subsidiary is worth between 10.2 billion and 15.2 billion euros in case of redemption. Thanks to the investment savings or structure fees that it would generate, a rapprochement with Iliad Italia would create 7 billion to 11 billion euros of synergies, continues Barclays. Figures that necessarily give reflect.
broken prices
With 10.5% of the Italian mobile market at the end of September 2021, according to the Italian regulator of AGCOM telecoms, excluding subscriptions for connected objects (Machine to Machine, M2M), ILIAD is a potential partner for Vodafone, holder 23.3% of the sector. The “combined market share” of the two operators around 33%, “would not be significantly higher than that of Deutsche Telekom in Germany (41%) or Orange in France (37%),” says Tajesh Tailor, specialist Telecoms at the Fitch Ratings rating agency. An argument to be argued with the competition authorities, anxious to maintain a sufficient level of competition to avoid a flight of the price of subscriptions. Last arrived in the Italian telecom market, Free is itself born from the redemption of assets in Wind Tre, a condition imposed by the European Commission at their merger.
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