Vodafone and Iliad discussing merger of Italian units, report finds

Vodafone and Iliad are holding talks to reach a deal meant to merge their respective units in Italy, according to local reports.  

If an agreement is to be reached, the combined company would be the country’s leading mobile operator, with around 36 percent of the market and nearly $ 1.13 billion in revenues.  

Discussions between the two companies are actively studying ways to clinch a tie-up of their respective businesses in Italy.  

According to the report, Iliad, which is planning to start wireline broadband operations in Italy next week, is working with Lazard Ltd. Still, it’s uncertain if the talks will lead to a transaction.   

As such, the deliberations come as Telecom Italia SpA weighs a $ 12 billion takeover bid from KKR & Co. Meanwhile, Vodafone has recently discovered a potential purchase of Three UK from CK Hutchison Holdings Ltd., Bloomberg News reported earlier on Saturday.    

Iliad, which will make its wireline broadband debut in Italy on January 25, is working with investment bank Lazard (LAZ.N) on its strategic plans in Italy.  

In addition, if the talks were successful, a deal would create a telecoms center with a mobile market penetration of about 36 percent and combined revenues of nearly $6.80 billion.  

It is worth mentioning that Iliad, which billionaire founder Xavier Niel leads, has been reviewing options to further expand in Italy in recent months as it seeks to take advantage of deal fever in Italy’s telecoms industry to accelerate consolidation and cease a price war that has been slashing its margins, the sources said.  

Earlier this month, Iliad’s Italy boss Benedetto Levi said that the French firm was open to buying a rival operator.  

“If a company, as a whole or in part, becomes available on the market we will consider it without any preconception,” he said.  

On Nov. 17, Vodafone’s boss Nick Read said that partnership was needed in Europe, particularly Italy, Spain, and Portugal, where “all players are suffering.”  

The discussions are happening in parallel with Telecom Italia still assessing a $12.25 billion takeover approach from U.S. fund KKR (KKR.N) to make Italy’s biggest phone group private.