Vodafone rejects offer from French owner of Eir to merge Italian businesses

Eir-owner Iliad said Vodafone had rebuffed a revised 50:50 proposal to create an operator with a combined enterprise value of €14.7bn

Analysts at Citi said Vodafone's rejection of Iliad, founded and majority owned by French billionaire Xavier Niel, was disappointing.

Vodafone said it had rejected a sweetened offer from rival telecom operator Iliad to merge their Italian businesses and was pursuing other deals in a market where it is losing revenue and makes no return on its capital. Iliad is the French telecom operator that owns Eir in Ireland.   

Iliad said Vodafone had rebuffed a revised 50:50 proposal to create an operator with a combined enterprise value of €14.7bn. 

Vodafone said in December, after Iliad made its approach public, it was exploring options with several parties, potentially including a merger or a disposal.

One of them was a deal with Swisscom's Fastweb Italian unit, sources familiar with the matter said. 

A Vodafone spokesperson said on Wednesday: "We are no longer in talks with Iliad, but our discussions with others continue." 

The talks with Swisscom were more advanced than others, one person with knowledge of the matter said.

Analysts at Citi said Vodafone's rejection of Iliad, founded and majority owned by French billionaire Xavier Niel, was disappointing. "A deal with Swisscom's Fastweb could now become the base case," they said. "An inferior outcome in our view." 

Shares in Vodafone, which have fallen 28% in the last 12 months even as it agreed consolidation deals in Spain and Britain, were trading down 3% in morning deals. 

The consolidation of telecom providers appears to have quickened following the ending of the pandemic. A longstanding proposal by Vodafone UK and Three UK to merge their operations is to be investigated by the UK's competition watchdog. They plan to create the largest mobile operator in Britain. 

In Ireland, Three Ireland said in January it planned to cut up to 150 jobs, or over 10% of its total staff, as the company's earnings continue to be hit by rising costs. It employs more than 1,300 staff, including at a customer-care facility in Limerick and at head offices in Dublin. 

• Reuters and Irish Examiner