French operator Iliad has confirmed that it will set up a fourth operator in Italy if two existing operators, Three and Wind, are allowed to merge.
Iliad – which owns Free Mobile in France – has agreed to pay the two other operators – owned by CK Hutchison and VimpelCom – €450 million for 2 × 35MHz of spectrum between 2017 and 2019. It will also acquire cellsites from Wind, Three and third parties and negotiate an agreement to share radio network in rural areas.
Iliad, Three and Wind will put the proposal to the European Commission, which is due to adjudicate on the Three/Wind merger proposal by September 8.
At the same time Xavier Niel, who owns a controlling stake in Iliad, has told the company that he “has only a marginal financial interest, of less than €25 million” in Telecom Italia and he will sell that “in the next few weeks”.
Iliad says that if the proposal is accepted by the Commission, its “plan is to capitalise on the experience it has acquired in France with the successful launch of a fourth mobile network operator in 2012”. It will invest in the new operation over five to seven years “entirely financed by the group’s extensive liquidity” and “without threatening the group’s position as one of the least indebted operators in Europe”.
The company said: “If approved by the European Commission, the agreement is a unique opportunity for the Iliad group to enter the Italian telecoms market, which is stepping up its digital transition.”
Its agreement with Three and Wind call for the transfer of “a balanced set” of frequencies for 3G and 4G services, including 2 × 5MHz at 900MHz, 2 × 10MHz at 1800MHz, 2 × 10MHz at 2100MHz and 2 × 10MHz at 2600MHz.
Iliad will acquire “several thousand” macro sites in densely populated areas. In rural areas it will either acquire several thousand more sites or come to a network-sharing agreement. There will also be “a 2G, 3G and 4G roaming agreement on the merged network, for a period of five years renewable for one further five-year period at the initiative of Iliad.”
According to figures provided by Wind and Three in 2015, when they first proposed their merger, Telecom Italia has 35% of the Italian mobile market and Vodafone 29%. In the fixed market, Telecom Italia dominates with 50%. The combined Wind/Three will have 16%, slightly ahead of Swisscom’s Fastweb at 15% and Vodafone at 13%. Tiscali trails with 6%.
Fastweb was also negotiating with Iliad to take on spectrum and facilities from Wind and Three in order to make their merger more attractive to the Commission, but Iliad has emrged as the preferred bidder.
A merged Wind/Three would be 50-50 owned by CK Hutchison and VimpelCom, with each company providing the chair of the board for 18 months at a time.
