After all the speculation in recent weeks, it has been confirmed that Iliad Group did make an offer to buy Vodafone Italy as part of efforts to turn down the heat in this highly competitive market.

However, Vodafone almost immediately rejected the proposal, stating somewhat primly via a stock exchange release that this preliminary indication of interest was "not in the best interests of shareholders."

We now know that Iliad, in partnership with investors Apax Partners, made an €11.25 billion (US$12.8 billion) offer for 100% of Vodafone's Italian operations.

Figure 1: Iliad appears to have given up on Vodafone Italy, at least for now, saying it will pursue its stand-alone strategy.
(Source: Reuters/Alamy Stock Photo)

Vodafone clearly believes that the offer is not enough, although it indicated that it is still pursuing several "in-market consolidation opportunities" in its major European markets, including Italy. The group is also interested in M&A opportunities in Portugal, Spain and the UK.

For its part, Iliad intimated that Vodafone has missed a big chance to solve a number of its problems in Italy. The offer had certain "merits," the France-based group said, including fulfilling "Vodafone management's desire for consolidation in Italy."

Indeed, no one seems to have greater enthusiasm for consolidation than Nick Read, the CEO of Vodafone Group. He is also now coming under pressure from Cevian, an activist investor that is reported to have taken a stake in Vodafone and begun agitating for a portfolio shake-up.

Price war

Iliad appears to have given up on Vodafone Italy, at least for now. It said it will pursue its stand-alone strategy, and again bragged that it has gained more than 8.5 million mobile subscribers in 3.5 years. It is also looking to mop up customers in the fixed-line segment with its recently launched low-cost fiber plan.

However, a reduction in the number of players from four to three would bring relief in one of Europe's most fiercely competitive markets, and not just for Iliad and Vodafone. Rival operators Telecom Italia and WindTre have also been suffering from a long-running price war that was sparked when Iliad Italia entered the market in 2018.

Indeed, WindTre is about to lose its CEO, after Jeffrey Hedberg decided to quit in April 2022. Perhaps reflecting the difficulty of the task that lies ahead, he will be replaced by two executives: Gianluca Corti, currently chief commercial officer, and Benoit Hanssen, chief technology officer.

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— Anne Morris, contributing editor, special to Light Reading