The amount of the transaction was not disclosed.

According to the calculations of Equita analysts, the value of a possible transaction would be between 11 and 13 billion euros.

Asked by AFP, Vodafone Italia declined to comment.

Iliad, owned by Xavier Niel, entered the mobile telephony market in Italy in 2018 and claims a 10.5% market share there.

In this country where the incumbent operator Telecom Italia is attacked by competitors with aggressive pricing, Iliad also entered the fixed telephony market last January.

The French group is targeting a turnover of one billion euros in 2022 in Italy, after having recorded in the third quarter of 2021 revenues up 20.9% to 207 million euros.

By acquiring Vodafone Italia, Iliad would control more than a third of the mobile market in Italy and would post a combined turnover of almost 6 billion euros.

Vodafone Italia, which has a market share of 28.8% in mobile and 16% in fixed, posted revenues of 4.5 billion euros during its staggered financial year, which ended in March 2021.

The Vodafone logo on a store in Milan, Italy, in 2019 Miguel MEDINA AFP/Archives

Founded in 1999, the parent company of the operator Free is present in France, Italy and Poland through the operator Play.

Sixth-largest European mobile operator by number of subscribers, Iliad has 42.7 million subscribers and generated a turnover of 5.9 billion euros in 2020.

European regulation

The operation is part of a context where several managers of European operators have called for the consolidation of the market on the continent to reduce competition and increase their profitability, at a time when they are investing heavily in the deployment of 5G and the optical fiber.

"The operation would be very demanding for Iliad from a financial point of view and is not played out in advance with regard to authorizations, even if the European regulator now seems more willing to consider a consolidation (...) with probably counterparties (for example on frequencies)", estimated the analysts of Equita.

Awaiting decisions from national and European regulatory authorities, "for the moment, these consolidation movements have not been favored", reminds AFP Sylvain Chevallier, telecoms specialist and partner at the consulting firm Bearing Point.

"There are clearly countries like Italy, Spain or France, where there is extremely strong downward pressure on prices which is not sustainable in the medium-long term. It is natural to see consolidation movements appear in these countries", he adds.

With regard to subscription prices, Italy and France, where four major players are present on the market, have the "lowest levels of the major Western countries", according to a study by Arthur D. Little.

For comparison, on the mobile, the most competitive 50 GB package of Italian operators is 10 euros per month.

In France, it is 13 euros per month, against 47 euros in Germany and 63 euros in the United States.

In this vast movement of consolidation, the next issue to come for Italian telecoms is at Telecom Italia: the incumbent operator is also the subject of a takeover proposal by the American investment fund KKR, which declared itself ready in November to put 10.8 billion euros on the table.

The logo of Telecom Italia during a general meeting of shareholders in Milan, in 2015 GIUSEPPE CACACE AFP / Archives

The fund is still awaiting a response from Telecom Italia to its request for access to its accounts for an in-depth audit, the so-called classic "due diligence" phase, before launching a takeover bid.

© 2022 AFP