Iliad Group outlined a proposal to combine its operation in Italy with Vodafone’s local unit, offering €6.5 billion in cash as part of the deal alongside a 50 per cent stake in the newly formed venture.
The suitor pinned the value of Vodafone Italy at almost €10.5 billion, with its unit in the country worth around €4.5 billion. It proposed both parties take out a shareholder loan of €2 billion to “ensure long-term alignment” and plans to gain €500 million in cash from the deal.
Iliad claimed the pitched 50/50 venture, currently dubbed NewCo, would bring together Iliad’s approach to connectivity, affordability and inclusivity with Vodafone’s B2B expertise.
The operator group’s CEO Thomas Reynaud added: “The market context in Italy calls for the creation of the most innovative telecom challenger, with ability to compete and create value in a competitive environment. We believe that the profiles and complementary expertise of Iliad and Vodafone in Italy would allow us to build a strong operator with the ability and financial strength to invest for the long term.”
The profiles and complementary expertise of Iliad and Vodafone in Italy would allow us to build a strong operator with the ability and financial strength to invest for the long term
Thomas Reynaud Iliad Group CEO
Iliad pointed to the fact its offer provided “both value and cash” while meeting “Vodafone’s publicly stated intention to transform and simplify the group.”
The proposal includes a call option for Iliad to increase its stake in the JV.
Tight-lipped
In its statement, Vodafone did not refer to the specifics of the offer, simply reiterating it was “supportive of in-market consolidation in countries where it is not achieving appropriate returns on invested capital,” adding it was “exploring options with several parties to achieve this in Italy, including through a merger or a disposal.”
Vodafone also cautioned there was “no certainty that any transaction will ultimately be agreed”.
The UK-based company’s business in Italy is currently the subject of a Group-level review, with media raising several names as potentially in the frame. However, Iliad has regularly been linked and has previously offered to buy Vodafone out of the market outright.
If agreed, a deal in Italy would be Vodafone’s third major European deal in progress, with the company currently trying to combine its business in the UK with local rival 3 and sell-up in Spain.
GSMA Intelligence connection estimates for Q3 2023 have Vodafone and Iliad’s Italy units as the third and fourth largest of five operators, with 17.5 million and 10.5 million, respectively. Combining their bases would propel them above Telecom Italia (18.2 million) and Wind Tre (19.6 million) by this metric.
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