Two major telecom companies Vodafone and Iliad are apparently working on partnering up over a deal in Italy that will bring together the businesses of both the companies. The partnership between the two telecom giants can bring an end to the tough competition existing in the third-largest economy of the eurozone. A source who requested to be anonymous informed that to Reuters and added that both the companies are in talks with each other and are looking forward to tying up their respective businesses in Italy.
The Advantages of the Deal and Hindrances
Iliad is working with the investment bank Lazard over its strategic plans in Italy as informed by the source. It is to be noted that Iliad will be launching its wireline broadband in Italy on January 25. The anonymous source has also warned that the deal between the two telcos might not be certain. However, if the deal is signed, the telcos will become a powerhouse in the country with a mobile market penetration of 36% along with total combined revenue of over 6 billion Euros. Both Vodafone and Iliad have declined from making any comments over the partnership.
The telecom industry in Italy has been on a constant rise and Iliad has been looking to make the most of it by expanding further in the country under the leadership of billionaire founder Xavier Niel. Through expansion in Italy, Iliad looks to strengthen its presence in the market and stop the price war that has been hampering its margins. It is to be noted that Telecom Italia is still evaluating a 10.8-billion-euro takeover deal offered by US Fund KKR which looks to buyout Italy’s biggest private telecom operator.
However, there might be a few hindrances in the deal between Vodafone and Iliad. Vodafone is one of the biggest operators in the country and has a revenue of around 5 billion euros and a market penetration of about 28.5%. On the other hand, Iliad is a much smaller company with a revenue of about 674 million euros in the year 2020 and a total mobile market share of 7.7%. But Iliad has shown a good performance during the pandemic and third-quarter sales in 2021 went up by 21%. Moreover, the merger between the two telcos will also require approval from both Rome and European Antitrust Regulators.
