Vodafone and Iliad are in negotiations to merge their respective businesses in Italy. Such a merger would provide advantages for both corporations in one of Europe’s most competitive markets and should be positive for the industry in general.
Discussions between the two corporations are ongoing, and both sides are actively looking for ways to connect their separate businesses together in Italy. If the merger is approved, it will create a telecommunications giant with over 36% mobile market penetration and combined sales of nearly $6.80 billion. Vodafone and The Iliad both declined to comment on the negotiations.
The talks take place as the local incumbent, Telecom Italia, continues to evaluate a $12.25 billion acquisition offer from US investor KKR aimed at taking Italy’s largest phone business private.
Industry leaders have frequently recommended the pursuit of four-to-three telecom mergers, which may generate cost synergies and boost margins by reducing the number of mobile providers in Italy, notably TIM, Vodafone, WindTre and Iliad.
In Italy, Vodafone generates over $5.6 billion in yearly revenue and has a market share of 28.5 percent among mobile phone users. Iliad, on the other hand, is substantially smaller, with an annual revenue of $762 million in 2020 and a mobile market share of roughly 7.7%.
Separately, Vodafone has had conversations with CK Hutchison, the owner of Three UK, late last year about buying the rival. A Vodafone-Three UK merger has been rumored for years, as Vodafone has partnered with CK Hutchison in other regions such as Australia. Vodafone’s bid for Three UK has been put on hold, but talks might resume if CKH is successful in persuading authorities to sanction a separate transaction that would let it to sell its UK mobile phone towers division. Vodafone and CK Hutchison representatives declined to comment.