Iliad becomes Europe's sixth largest mobile operator with Poland move

Iliad has announced its intention to acquire Poland’s Play, a move that it claims will make it the sixth largest mobile operator in Europe.

The French firm has brokered a €2.2 billion deal to acquire all of Play’s share capital; it will acquire  40.2% directly from Play’s two major shareholders, Kenbourne Invest and Tollerton Investments Limited (the pair hold an equal number of shares) and the remainder via a tender offer.

“This excellent alliance constitutes a new growth driver for the Iliad Group and gives it access to one of Europe’s high-potential telecom markets,” said Iliad CEO Thomas Reynaud, in a canned statement.

“The transaction will make Iliad the sixth-largest telecom operator in Europe,” Reynaud said, the footnotes showing that he based this statement on the total number of mobile subscribers in Europe, excluding M2M. The group will have 41 million mobile customers across France, Italy and Poland, presuming the deal goes ahead, with Play contributing 15 million of the total.

“Fully committed to implementing its Odyssey 2024 Plan, Iliad is a solid group that is pursuing its expansion with confidence,” Reynaud said.

Indeed. After a couple of decades as an ISP, Iliad launched Free Mobile as France’s fourth mobile network operator as recently as early 2012. The firm focussed solely on its home market for a few years, but has been pursuing a moderately aggressive expansion strategy in recent times; it launched in Italy just over two years ago, shortly after teaming up with NJJ – the private investment company of founder Xavier Niel – to take control of Irish incumbent Eir.

Separately, NJJ acquired the Swiss mobile operator now known as Salt in 2015, but there are clearly synergies between the telcos; Iliad and Salt sold off towers assets to Cellnex in parallel deals last year, for example. NJJ also holds a majority stake in Monaco Telecom and through it mobile operators in Cyprus and Malta.

That’s starting to look like quite an empire. And given Reynaud’s “expansion with confidence” comment, it could well be that the Iliad side of the empire has not yet completed its family. But first the company needs to tie up the Play deal. The subscription period for Play holders to tender their shares will run from 19 October to 17 November, with settlement due before the end of the month.

Play’s board of directors remains neutral on whether shareholders should accept the 39 zloty-per-share (€8.70) offer, but said it believes the offer price reflects the fair value of the company. Iliad took great pains to emphasise the hefty premium it is offering over Play’s recent share price, but the offer is not hugely higher than the level the company was trading at in January. Nonetheless, the deal, which would give Play an enterprise value of €3.5 billion, will likely look attractive to shareholders.

It still requires various regulatory approvals, including the green light from the European Commission, but given that it does not alter the number of network operators in the market, the transaction should find favour with the authorities.