Iliad and Wind Tre create wholesale mobile JV

Deal Handshake

Iliad and WindTre have formally announced the creation of their new wholesale venture Zefiro Net, an entity that will manage the supply of mobile infrastructure in hard-to-serve areas of Italy.

The project, which has been on the cards for the best part of a year – publicly at least – will cover more than a quarter of the Italian population; 26.8 percent, to be precise, according to a joint statement issued by the two operators.

It’s a pretty straightforward model. Iliad and Wind Tre will each own 50 percent of Zefiro Net, which will operate as a wholesale player, with its two parents as retail customers. The operators’ announcement makes no mention of services to other retailers, should any come knocking, but indications are that Iliad and WindTre will be Zefiro Net’s only customers, at least initially. A lengthy document published by regulator AGCOM when it gave the project the green light last summer noted that “at the moment, it is not expected that [the JV] will provide wholesale services to third parties.” The regulator refers to the agreement as a multi-operator core network project, rather than the creation of a new wholesaler.

That said, AGCOM’s statement does not seem to rule out such a move, so while it could be that Iliad and WindTre are looking to retain a competitive advantage from a coverage point of view, they could equally see a business opportunity in expanding Zefiro Net’s customer base in future.

At this stage, the project is a way for WindTre to finance the expansion and/or upgrade – the JV has specifically pledged to increase 5G coverage – of its mobile infrastructure in less economic areas. The physical infrastructure assets being contributed to the venture initially belong to Wind Tre, with Iliad basically buying in. Going forward, investments are shared, of course.

For Iliad, which famously disrupted the Italian mobile market when it launched low-cost services almost five years ago, brokering a deal with the market leader is a sensible way to expand its footprint. There was talk late last year of Iliad showing interest in acquiring TIM’s fixed network assets, or a stake in a networks business, but that story is still running. Either way, Iliad is clearly not content to remain an also-ran in the Italian telecoms market.

Incidentally, AGCOM’s last set of figures for 2022 show that as of the end of September WindTre led the market for human SIMs – excluding IoT, that is – with a 25.6 percent share, a single percentage point ahead of TIM, and more than three above Vodafone, while Iliad had upped its market share to 11.9 percent. When non-human SIMs are factored in, TIM comes out on top with 28.5 percent, while Iliad slips back to just 8.7 percent.

All of which is a long-winded way of saying that the Italian market is still pretty competitive, thus there is little wonder we are seeing moves like the creation of Zefiro Net as operators try to reach as many potential customers as possible while keeping investment costs down.

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