Upstart French wireless carrier Iliad set its sights on Italy this week with an agreement to acquire spectrum and other assets held by subsidiaries of Hutchison and VimpelCom in that country. The deal would enable Iliad to enter the Italian wireless market as a fourth national operator that would compete against Telecom Italia (TI) and Vodafone.
Hutchison and VimpelCom are pursuing plans to combine their respective HG3 and Wind mobile subsidiaries into a joint venture that would control more than 31 million Italian mobile subscribers. Observers say the proposed divesture of wireless spectrum and other assets to Iliad is intended to alleviate regulatory concerns over that transaction, which would otherwise reduce the number of Italian national wireless carriers from four to three. (Citing the reduction of competition in the Italian wireless sector and the potential impact of that deal on wireless rates, the European Commission launched a formal probe into the proposed Hutchison-VimpelCom joint venture in March; that probe remains in progress.) For Iliad, the deal also represents the carrier’s first foray outside of France just four years after launching its cut-rate “Free” mobile service, which has forced French competitors to respond with price reductions of their own.
Under the agreement, Iliad will acquire a portfolio of third- and fourth-generation wireless spectrum assets from Hutchison and VimpelCom for a price of €450 million (US$497 million). The transaction also covers macro sites and other network assets for which financial details were not disclosed. Hutchison and VimpelCom will provide Iliad with roaming rights on their merged network for five years. Xavier Niel—the French billionaire in control of Iliad—has pledged to sell options to buy shares in rival TI that he acquired earlier this year. Characterizing the spectrum purchase as “a unique opportunity,” a spokesman for Iliad told reporters that his company intends “to capitalize on the experience it has acquired in France.”