Vodafone edges to the top of the FTSE 100 today as momentum begins to grow after sources said it was in talks with Iliad to strike a merger deal in Italy.
Shares are up over five per cent on the London market to 124.26p this afternoon.
It comes after Reuters reported over the weekend that the two telecoms are discussing a way to combine their respective businesses in a bid to end the intense competition in Europe.
Anonymous sources said that both companies are actively looking at how they can tie-up businesses, with the result being a telecoms titan in the continent.
If successful, a merger between the two would have a mobile market penetration of about 36 per cent and combined revenues of nearly €6bn (£5bn).
Vodafone’s boss Nick Read previously said that consolidation was needed in Europe, particularly in Italy, Spain and Portugal where “all players are suffering.”
Some suggest that merging will unlock synergies and lead to cost saving for mobile operators.
Nonetheless, any deal would need to jump through competition hurdles of both Rome itself, as well as European antitrust regulators.
Vodafone has annual revenue of about €5bn (£4.2bn) in Italy and a 28.5 per cent market penetration among mobile phone customers, according to Italy’s communications watchdog AGCOM.
Iliad’s Italian unit reported €674m (£565m) in annual revenue in 2020 and a mobile market share of about 7.7 per cent, yet weathered the pandemic storm with third quarter sales up 21 per cent to €207m (£174m) in 2021.
Iliad is set to make its wireline broadband debut in Italy tomorrow, according to Reuters, and is working with investment bank Lazard on its strategic plans, signalling that a deal with Vodafone is entirely set in stone.
However, it’s not just Iliad that is getting attention.
There are ongoing discussions around US fund KKR’s €10.8bn (£9.1bn) takeover of Telecom Italia. Iliad’s founder Xavier Niel also sits on the KKR board.
Vodafone is not the only one spying up the top spot, and Unilever jumped six per cent to the top of the FTSE 100 after hedge fund Trian Partner built up a stake in the consumer goods giant.