Telecom Italia, one more stone in Xavier Niel’s building?

by bold-lichterman

Xavier Niel wants to continue his conquests in the European telecom sector. After having acquired Orange Suisse for 2.3 billion euros, becoming “Salt”, and 55% of Monaco Telecom for 322 million euros, the boss of Iliad, came to be among the shareholders of Telecom Italia with a decision potential participation of 11.2% of the capital. Nothing surprising in the strategy of Xavier Niel, who for three years has continued to shop in the sector and seeks to invest his assets.

The hypothesis could have stopped there, except that this investment in the first Italian telecom operator, estimated at 1.7 billion euros, doubles that of Vincent Bolloré. The boss of Vivendi had invested 3 billion euros in the transalpine group which he holds 20%. So, will the two French CEOs be rivals or future partners?

In the equity investments of Xavier Niel, two choices seem to be favored: secondary operators (4th or 5th nationally), but who are potential bridgeheads to other markets. Outside of Europe, the boss of Iliad also invested this year in MyRepublic, a Singaporean operator present in New Zealand, and which targets Australia and Malaysia where the growth of mobile subscriptions is exponential.

Golan and Hot Mobile talk

Another choice in the strategy of Xavier Niel, the 30% of shares he owns in Golan Telecom, whose ambition is to become the “Free israëlien” and which rivals the cable operator “Hot Mobile”, owned by Patrick Drahi (Altice-SFR -Numericable). By developing on TV services, Golan came to walk on the flowerbeds of the entity of Altice. But while the rivalry had been predicted between the two French bosses, the Israeli press revealed Thursday, October 29 that the two operators could merge, within the framework of the resale of the shares of its founder Michaël Boukhobza. Hot Mobile would buy Golan for around 124 million dollars, while creating new synergies between the two players, and gain 15% of Golan’s value.

Rather than rivalry, and on which of the two bosses will own the most shares in Telecom Italia, Bolloré and Niel could also choose to merge their shares, thus taking control of the Italian. The financial transaction would also be easier to carry out with the Consob, the supervisory authority of the Milan Stock Exchange.

Finally, there is the scenario where Xavier Niel would like to go it alone to resell his shares in Telecom Italia at a higher price to Vincent Bolloré, and to make a capital gain with a view to new acquisitions. The Vivendi group would then take sole control of Telecom Italia, alongside historical Italian institutional investors.