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Iliad to purchase Polish telecom Play

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French telecommunications service provider Iliad S.A. has agreed to buy the Polish telecommunications company Play Communications S.A. for $2.6 billion as it expands across Europe. The deal will make Iliad the sixth largest mobile operator in Europe.


In an announcement on Monday, the companies revealed that Iliad had offered $10.35 per share for Play and received binding commitments from two controlling shareholders for a 40% stake, which would give it the majority of seats on Play’s board of directors. Iliad also hopes that the deal will allow the company to enter the growing Polish telecommunications market and boost Play’s growth in the mobile sector.


With the addition of Play, Iliad will have 41 million subscribers in France, Poland and Italy. However, the transaction still needs to be approved by the relevant regulatory authorities, and a notification of the proposed acquisition has to be submitted to the European Commission. The public bidding is expected to begin in mid-October and run for a month.


The acquisition will be funded by debt and cash, and Iliad expects Play to add to their earnings per share. This move is expected to have a negative effect on Iliad’s free cash flow. Although the purchase will increase Iliad’s debt weight, the company has committed to focus on a gradual debt reduction after acquiring the ownership of Play. It also plans to continue the process launched by Play to sell off part of its passive infrastructure.


Iliad CEO Thomas Reynaud commented: “This deal is a major chapter in our internationalization strategy. It will make us Europe’s sixth-largest mobile phone operator”. Reynaud declined to comment on further geographic expansion, but said Iliad would launch an allied telecommunications business and accelerate fiber production in France, while in Italy it would offer high-speed Internet.

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