The proposed NewCo will create an attractive new market offering focuses on innovation, growth, and optimal customer experience. This will also be bolstered by the unanimous support of iliad’s board of directors and its main shareholder Xavier Niel.
“The market context in Italy calls for the creation of the most innovative telecom challenger, with ability to compete and create value in a competitive environment,” said Thomas Reynaud, iliad Group CEO.
“We believe that the profiles and complementary expertise of iliad and Vodafone in Italy would allow us to build a strong operator with the ability and financial strength to invest for the long term. NewCo would be fully committed to accelerating the country’s digital transformation and especially fibre adoption and 5G deployment, with more than €4 billon of investment planned over the next 5 years.”
NewCo would specifically benefit from iliad’s innovative approach to connectivity, affordability, and digital inclusivity as well as the expertise of Vodafone in B2B.
Should the deal go ahead NewCo would create an innovative challenger in an Italian market which currently has five mobile network operators and more than ten fixed broadband providers.
In a statement, Vodafone group commented on the deal saying: “Consistent with its previous statements, Vodafone is supportive of in-market consolidation in countries where it is not achieving appropriate returns on invested capital and confirms it is exploring options with several parties to achieve this in Italy, including through a merger or a disposal.
There can be no certainty that any transaction will ultimately be agreed. If required, a further announcement will be made when appropriate.”
The proposal gives Vodafone Italia an enterprise value of €10.45 billion. Giving Vodafone 50% of the share capital of NewCo, together with a €6.5 billion cash payment and a €2 billion shareholder loan to ensure long-term alignment. Vodafone’s equity in NewCo at closing is valued at €1.95 billion.
As part of the proposed transaction, iliad would have a call option on Vodafone’s equity stake in NewCo and would be able to acquire a block of 10% of the NewCo share capital every year at a price per share equal to the equity value at closing.
Should iliad choose to exercise the call options in full, this would generate an additional €1.95 billion in cash for Vodafone.
NewCo expected to generate revenues of approximately €5.8 billion for financial year ending March 2024.
