While the parties anticipated the AGCM’s Phase 2 investigation, they remain confident it will lead to a favourable outcome
The combination of the two operators aims to create a stronger challenger to TIM
On 11 September 2024, the Italian competition authority – Autorità Garante della Concorrenza e del Mercato (AGCM) – opened a Phase 2 investigation to assess the proposed acquisition of Vodafone Italia by Swisscom under national merger control rules. The transaction, which was announced on 15 March 2024 and formally notified to the AGCM on 12 August, would see Swisscom purchase Vodafone’s Italian unit for an enterprise value of €8bn (£6.8bn) on a cash- and debt-free basis. Swisscom has previously stated that it would merge Vodafone Italia with its local subsidiary, Fastweb, combining the operators’ mobile and fixed networks to create a leading converged challenger to TIM. In particular, the deal would create a much stronger competitor to TIM in the fixed broadband market, with Wind Tre third by share of subscribers.
Phase 2 reviews are common in telecoms mergers, although competition authorities have not always come to the same conclusion
The in-depth investigation into the acquisition was first announced by Swisscom, which stated that Phase 2 reviews are not uncommon in the telecoms sector and that it remains convinced that the transaction is pro-competitive. The first half of this statement is certainly correct. In February 2024, the EC approved the proposed 50-50 joint venture between Orange and MasMovil in Spain after a Phase 2 investigation. Clearance required commitments from the parties, specifically the divestment of spectrum, plus an optional national roaming agreement for remedy taker Digi. However, in July of that year, in Portugal, a detailed merger review led the Autoridade da Concorrência (AdC) to block the acquisition by Vodafone of Cabonitel, the parent company of cableco Nowo. That transaction would have bolstered Vodafone’s position in the Portuguese market through the absorption of the country’s fourth largest converged operator, reducing the number of fixed providers from four to three. In Italy, Swisscom has pledged to work “closely and constructively” with the AGCM to secure a timely clearance of the Vodafone deal and to keep the market updated of any significant developments.
An exit from the Italian market would follow the sales of Vodafone’s businesses in Hungary and Spain
According to Swisscom, the Vodafone Italia acquisition is on track and should be completed in Q1 2025. Having secured the necessary financing in May 2024, it received unconditional approval under Italy’s Golden Power legislation from the Presidency of the Council of Ministers, which determined that the deal would not pose a risk to national security. In July, the transaction then received unconditional approval from the Swiss Competition Commission. It is still subject to AGCM approval, which has published a bulletin stating that the acquisition could create a dominant player in the fixed-line wholesale access market and in the supply of retail services to residential, public administration and corporate customers. While there is a sense that the AGCM may be more open to this deal than the previously-proposed Vodafone Italia/Iliad Italia merger, which would have combined two of Italy’s four mobile network operators, unconditional clearance is not a foregone conclusion at this stage. Approval (with or without remedies) would represent another retrenchment for Vodafone after the sale of its Hungarian and Spanish units, potentially completing the operator’s planned dealmaking to simplify its European footprint.
