Swisscom last remaining suitor for Vodafone’s Italian business after Illiad snub

Telecoms company Swisscom is reportedly the last company standing for a potential tie-up with Vodafone’s Italian business.

A combination with Swisscom’s Fastweb Italian business is the last remaining option Vodafone has been working on to rescue its own division in Italy, according to three anonymous sources cited by Reuters. 

Last month it snubbed an offer from French telco Iliad, which had tabled a 50/50 joint venture. Vodafone would have received a cash payment of €6.6bn (£5.6bn) and a shareholder loan of €2bn (£1.7bn).

At the time, it said discussions with other operators were ongoing.

Vodafone declined to comment and City A.M. has approached Swisscom, who also declined to comment to Reuters.

In a subsequent trading update, Vodafone boss Margherita Della Valle omitted mention of specific parties and instead stated that the company was just engaged in “active discussions.” 

An agreement with Swisscom’s Fastweb would establish Italy’s second-largest fixed-line broadband provider. It would likely face softer regulatory barriers than a deal with Iliad but with lower cost benefits, analysts said.

A recent report by Enders Analysis said a joint venture between Vodafone and Swisscom would give both
companies “better scale-economics in a challenging market.”

In October last year, Vodafone sold off its Spanish business to London-based but European outfit Zegona for £3.6bn.

The global telco giant is currently trying to merge its UK operations with Three UK, which is owned by China’s CK Hutchinson.

A European Commission document, seen by Reuters, suggests that EU regulators might relax their restrictions on mobile telecom mergers and encourage contributions from big tech towards the deployment of 5G.

But Vodafone and Three will still need the approval of the UK’s competition watchdog.