In a surprising turn of events, Vodafone has once again declined an enhanced merger proposal from Iliad for its Italian operations, despite the latter’s efforts to sweeten the deal. Iliad had revised its initial offer, made two years ago, in December, proposing a 50:50 joint venture that valued Vodafone Italia at €10.45 billion. This arrangement would have netted Vodafone €6.5 billion in cash and a €2 billion shareholder loan, with additional cash influx opportunities through a buyout option.
Iliad had claimed this offer presented a “compelling proposal” for Vodafone’s shareholders, combining value with liquidity. However, the telecom giant remained unimpressed. In an attempt to make the deal more appealing, Iliad later amended the terms, raising the cash portion for Vodafone to €6.6 billion and eliminating the buyout option, but to no avail.
Vodafone’s refusal to engage further with Iliad was succinctly stated in a brief communication, indicating an end to their discussions and an ongoing search for other potential partners. Among these, Fastweb emerges as a prominent contender. Speculations of a Vodafone-Fastweb alliance began circulating last November, suggesting a strategic combination that could reshape Italy’s broadband market, where Vodafone and Fastweb currently hold the second and fourth positions, respectively.
While a merger with Iliad would have significantly bolstered Vodafone’s mobile presence, it posed potential regulatory challenges by reducing the number of network operators. The outcome of the pending Orange/MasMovil merger in Spain is expected to provide insights into the European Commission’s stance on such telecom consolidations.
Despite the setback, Iliad remains committed to its proposal, believing it to be in the best interest of Italy’s telecommunication sector. The company plans to continue its independent growth in Italy, leveraging its substantial mobile customer base and burgeoning fixed broadband business.
As Vodafone continues its quest for a suitable alliance in Italy, the market watches closely, with Fastweb currently appearing as the most likely partner.
