The Swiss giant moves into the European telecommunications risk. The agreement with the French Iliad is more distant. The response from financial analysts was positive
Swisscom is in exclusive negotiations for the cash acquisition of Vodafone Italia. Eight billion euros of the operation, which involves exclusive negotiations, for 100% of the Vodafone Group subsidiary. The objective is to unite Vf Italia with the affiliate of the Swiss company Fastweb. The potential transaction represents the “best combination for value creation, advance payment of a cash consideration and certainty of the operation for Vodafone shareholders”, explains a note from the group. A consolidation which could guarantee, according to experts, less risk of violating antitrust regulations. And that could fuel the risk of European TLCs.
First the press rumors, then the confirmation. The wedding between Fastweb and Vodafone Italia can be a reality. On the other hand, the operation with Iliad is much more difficult. “Swisscom confirms that it is in advanced exclusive negotiations with Vodafone for the cash acquisition of 100% of Vodafone Italia. The Swiss group intends to merge Vodafone Italia with Fastweb, the Swisscom affiliate in Italy”, reads the note. “Although the full terms of the transaction have yet to be defined, Swisscom and Vodafone have agreed a preliminary purchase price for Vodafone Italia of €8 billion on a cash and debt free basis,” the statement continues. Vodafone would have preferred the Swiss to the French Iliad due to the greater component in contacts of the offer put on the table by the former. The potential transaction is expected to increase the value and cash flow of Swisscom and that, following the acquisition, the latter will maintain at least an A rating and that there will be a positive impact on its dividend policy , we read again in the note.
For ten years – recalls the Swiss telecommunications operator – Fastweb has been continuously growing in terms of customers, revenues and adjusted Ebitda and has established itself as a leading operator in the fourth largest European broadband market. The planned merger between Vodafone Italia and Fastweb “would bring together high-quality mobile and fixed infrastructure, complementary skills and capabilities to create a leading convergent company. The larger size, more efficient cost structure and significant synergy potential would enable the combined entity to unlock value for all stakeholders. The transaction would be a fundamental step in enabling Swisscom to realize its strategic objective of creating long-term value in Italy.”
The Vodafone-Fastweb marriage entails fewer antitrust risks than a Vodafone-Iliad consolidation, both of which are strong in mobile. Unless the European analysis focuses on specific segments, “the risk of a dominant position” with the merger between the two companies which would create the second fixed operator (after TIM), first for ftth (fibre to the home), is for Innocenzo Genna, lawyer and telecommunications expert who spoke with Radiocor, “residual”. Not only. Radiocor also reports the email from Margherita Della Valle, CEO of the Vodafone group, to employees. “In recent months, recognizing that the Italian market will need to consolidate, we have explored all options to ensure that Vodafone Italia is best placed for its future success. The union with Fastweb would be the opportunity to do just this.”
The hypothesis of the marriage between Fastweb and Vodafone is “to be considered with interest because we think that one of the solutions for the market is consolidation, so we look carefully but industrial credibility must always be kept in mind”. This is the opinion that comes from the national secretary of the Slc Cgil Riccardo Saccone on the negotiation at an advanced stage. Equita analysts also confirm the validity of the move. “We see the speculative appeal on Tim not running out after the deal, which should not have major approval obstacles, given that Iliad would remain interested in some form of consolidation on the Italian market and the recent approval by the antitrust of a major consolidation in Spain” : Furthermore, continues the business house, “for the market it is a consolidation that changes the balance less markedly compared to the Vodafone/Iliad hypothesis, strengthening Fastweb in the corporate mobile world and leading it to have a market share similar to competitors in mobile in general”.
The response on the stock market for the two main stocks was lukewarm in the case of the British Vodafone Group, flat in mid-afternoon, and in sharp decline for the Swiss Swisscom, whose shares are contracting by 1.80%. On the Italian front, slight recovery for Telecom Italia, +0.53 percent.