EU OKs Swisscom-Vodafone Italy deal

The telco shared news that the European Commission has unconditionally approved the transaction, informing Swisscom that the time frame it had for opening an investigation into the deal has elapsed.

Just one albeit significant hurdle remains in the form of an in-depth probe currently being conducted by Italy's competition watchdog, the Autorità Garante della Concorrenza e del Mercato (AGCM).

Swisscom played it cool when the probe was launched, insisting that these things are not uncommon, and repeating its argument that the Voda-Fastweb deal is pro-competitive.

However, the preliminary evaluation of the transaction shared by the AGCM in its regular bulletin last week suggests that this case is far from cut and dried.

In summary, it doesn't see the combination of Fastweb and Vodafone's mobile operations causing any problems. This is understandable given Fastweb sits a distant fifth behind Iliad, which the AGCM correctly identifies as the maverick challenger brand that keeps Vodafone, Wind Tre and incumbent TIM on their respective toes.

However, that is not at all how it feels about the fixed-line market, where the combination of Fastweb and Vodafone could have a significant bearing on the competitive landscape.

"As a preliminary matter, it is noted that the transaction, while leaving unchanged the leadership position that TIM holds in the market in question, achieves a significant consolidation, reducing the number of main operators in an already very concentrated market from four to three," the AGCM said. "The transaction also significantly strengthens the position of the second operator (currently Vodafone Italy), whose market share essentially doubles from 15-20 percent to 25-30 percent. Its distance from TIM is reduced from the current 25-30 p.p. (percentage points) to 10-15 p.p."

The tie-up would also create a new leader in the FTTH market, the AGCM says, one with the resources to maintain or potentially consolidate its position.

"On the basis of the elements mentioned above, it is believed that the transaction is likely to determine a significant impediment to competition in the market for fixed communication services for residential users, as well as in some specific competitive areas that it seems appropriate to distinguish within it from a product (with regard to FTTH technology) and geographical (with regard to the main urban centres) perspective."

If the AGCM's concerns are borne out by its Phase II investigation, then some pro-competitive remedies – like favourable fibre wholesale access services or a divestment or two – might be necessary to get this deal over the line.

In the meantime, Swisscom is repeating the party line – that it expects the transaction to complete during the first quarter of 2025. We'll see.