The news that Pietro Labriola will be TIM’s new CEO is hardly a surprise, but rumours of M&A in the Italian telecoms market are perhaps more unexpected.

No sooner had the Italian incumbent revealed that its general manager will take the job on as well, than Reuters floated the idea of a merger between two of its major mobile rivals: Vodafone Italia and Iliad.

First the more concrete of the two stories. Labriola, then chief executive of TIM Brasil, picked up the GM post at the telco in November when former general manager and CEO Luigi Gubitosi stepped down in the wake of the takeover attempt from KKR. The CEO position remained vacant for a couple of months, but Labriola always seemed the most likely candidate for the job, in no small part because he has the backing of TIM’s largest shareholder Vivendi.

While Gubitosi was – and presumably still is; he remains on TIM’s board – apparently in favour of exploring the KKR offer, Vivendi is not so keen. Thus Labriola’s appointment could have a knock-on effect on that proposed deal. Although there are many other factors at play too, including what the government makes of it.

Nonetheless, the KKR offer will doubtless form a sizeable part of Labriola’s job for the foreseeable future.

In taking the chief executive position he is, of course, resigning from his previous post as the telco’s Brazilian CEO. TIM Brasil has yet to name a new leader, but confirmed that the succession process is already underway and said it expects to make an announcement in the coming days. Chances are, the operator saw it coming.

It was harder to predict Italy’s latest consolidation report though.

Unnamed sources told Reuters that Vodafone is holding talks with Iliad with a view to combining their Italian businesses, adding the usual caveat that a deal may not result from the discussions.

Given the situation in the Italian market, where competition has been fierce since Iliad became the country’s fourth mobile network operator in 2018, talk of M&A is hardly unexpected. But chances of the two players involved coming to some arrangement seem remote. Or to put it another way, both would be likely buyers but unlikely sellers.

As the Reuters report points out, Iliad’s Italian CEO Benedetto Levi was recently quoted as saying that his company would consider buying a rival if one became available, but there was no hint of selling out of the market. Meanwhile, Vodafone has made it clear that it is courting M&A opportunities in Europe and its Italian business is struggling due to the competitive environment, but it remains a big market and one the telco might be reluctant to lose.

Furthermore, you have to question whether such a deal would pass regulatory scrutiny. The arrival of Iliad in Italy was linked to competition remedies imposed on the Wind Tre merger of 2016, thus allowing the market to be reduced to three MNOs now might not be top of the regulator’s – or the EU’s – wishlist.

But, never say never…and it would be an interesting move for the market dynamic. A merged Vodafone-Iliad would be Italy’s biggest mobile operator by some margin; the pair together claimed 36.2% of the overall market – and 33.8% excluding M2M – as of the end of September, according to regulator Agcom’s latest figures. TIM would drop to third place in the market, excluding M2M, incidentally.

Meanwhile, Vodafone is the second-largest fixed broadband provider in Italy, but is some way behind market leader TIM while its share is roughly the same as the likes of Fastweb and Wind Tre. Iliad’s fixed broadband service is due to launch imminently, albeit later than expected, and would give the merged company a leg-up in that sector.

There has been much talk of consolidation in Italy in recent months. Tiscali merged with Linkem in the fixed broadband market last year, and the ongoing FiberCop project is raising questions over whether certain players can stand alone in the fixed market. A tie-up between Vodafone and Iliad could well be seen as beneficial in the fixed market, but they might both have too much mobile presence to push through any deal there…should they manage to agree to such a move in the first place.