Swisscom confident on Vodafone Italy deal despite new probe

Swisscom announced that the Autorità Garante della Concorrenza e del Mercato (AGCM) has shared that it will move to a Phase II competition investigation linked to the deal.

After months of speculation, the Swiss incumbent inked an €8 billion deal to acquire Vodafone Italia in March. The plan is to merge the Vodafone unit with its own Italian business, Fastweb, creating a stronger market competitor.

Fastweb is essentially an also-ran in the Italian mobile market, although its customer base would increase Vodafone's market share by a few percentage points. However, in the fixed broadband space the pair have a similar presence, Vodafone serving 16.4% of the market and Fastweb 13.5% as of March, according to the latest data from regulator Agcom. Together the two companies would still be smaller than incumbent operator TIM, but only by just over seven percentage points.

While that would arguably create a more competitive broadband market in Italy, the loss of a major player was always going to raise antitrust concerns.

And that seems to be the line Swisscom is taking.

"Phase II reviews are not uncommon in the telecommunications sector," Swisscom said, in a statement. "Swisscom remains convinced that the transaction is pro-competitive. We will continue to work closely and constructively with the Italian Competition Authority to secure a timely clearance."

The operator confirmed that it still expects the deal to close in the first quarter of 2025, as it specified when it first announced the acquisition.

Despite this – minor, it hopes – set-back, Swisscom noted that overall the planned acquisition is running according to plan. In May the telco secured the financing it needs to pay for Vodafone Italia in the form of around €5 billion worth of bonds; it has a bank loan for the remaining €3 billion, it said.

On the regulatory front, it has been given the green light from the Presidency of the Council of Ministers in Italy, which had a say in the matter under the Golden Power legislation, and the Swiss Competition Commission has also approved the deal.

There are other regulatory approvals still to be ticked off, including clearance from the AGCM.

While Phase II reviews might be well within the norm, particularly when two major market players are seeking to come together, Swisscom was doubtless hoping it would get away with a lighter touch.

Nonetheless, there is no reason to believe that the Italian authorities will not clear the transaction. A stronger competitor to TIM in the fixed broadband space is likely to be viewed as a plus from an antitrust perspective, particularly given that there is another moderately sizeable player in the market in the form of Wind Tre and a handful of smaller competitors with decent brand recognition in Italy.

It would be a surprise if the AGCM moved to block the deal, so Swisscom's confidence is likely not misplaced.