by Amy-Jo Crowley, Elvira Pollina and Paul Sandle
Iliad wants to finalize a joint venture proposal with Vodafone VOD.L by the end of January to combine their Italian operations, two sources familiar with the matter said.
Vodafone last year rejected a takeover offer from the French telecoms group worth 11.25 billion euros for its Italian operations. Iliad is now exploring the possibility of creating a joint venture, the sources added.
Under pressure to improve Vodafone’s profitability, Chief Executive Margherita Della Valle said last month the British group was exploring options for its operations in Italy, the last of its three struggling European markets.
The total turnover of the Italian market has in fact fallen by 21% over the last decade to reach 27.1 billion euros, according to the professional association Asstel, in a context of fierce competition on prices.
Iliad and Vodafone declined to comment.
Media reports recently reported that Vodafone was also evaluating a potential combination of its assets with Fastweb, the Italian unit of Swisscom SCMN.S .
A deal with Fastweb would create Italy’s second-largest fixed-line broadband operator, with a strong footprint in the popular business segment.
A Swisscom spokesperson declined to comment.
Vodafone’s chief executive told reporters last month that the group was exploring consolidation options in Italy but that no timetable had been set for a decision.
Vodafone’s position in Italy is “very different” from that in Spain, where the company agreed to sell its activities to Zegona Communications in October, with a “strong” brand and network, Margherita Della Valle explained.
Any deal will need approval from European Union competition authorities, who have already taken a strict approach to this type of merger.
However, with Fastweb effectively becoming the fifth national mobile network operator, it could be easier to obtain authorization in Italy, Citi analysts said in a note published this month.
(Reporting Amy-Jo Crowley and Paul Sandle in London, Elvira Pollina in Milan; French version Kate Entringer)