Vodafone rejected an offer from billionaire telecoms tycoon Xavier Niel for a €10.5bn deal (£9bn).
Last month Mr Niel’s Iliad Group proposed to combine their Italian business . They argued that the move would build scale on a market which is becoming increasingly competitive.
Iliad, after an initial approach to Vodafone, sweetened the deal with an offer to give an additional €100m cash and to waive a call option which would have given it more control of the joint venture in the future.
Iliad, however, said Vodafone “failed” to accept the offer. This led to a 4pc fall in the share price of the UK-based company.
Vodafone’s spokesman added: “We stated in December that options are being explored with multiple parties in Italy.
“We have no longer been in contact with Iliad but we continue to discuss with other parties.”
Fastweb, the mobile and broadband service provider owned by Swisscom, is one potential candidate that could still reach a deal with Vodafone Italy.
Vodafone, under the leadership of Margherita Dela Valle as CEO, has streamlined its global operations to reduce debt and to return to growth.
In the UK, Three and Telecoms Giant have agreed to a £15bn merger. Competition regulators are reviewing the deal that will create the largest mobile network operator in the country.
Zegona Communications has also recently sold its Spanish operations for €5bn.
The rejection of Vodafone in Italy is a serious setback for M. Niel, an important French businessman and major shareholder in Le Monde. This rejection comes two years after an earlier €11bn bid was rejected.
Iliad argued that a merger with a rival company would create “the most innovative challenger” for Italy and help accelerate the roll-out of full-fibre internet in the country.
Vodafone would have received €6.6bn cash, a €2bn loan from the shareholder, and half of the combined entity’s share capital.
Iliad Italia received the second half of the capital along with a €400m payment in cash and a €2bn credit.
Iliad, the company that owns Free Telecoms in France, as well as operating in Poland, stated it was confident in the fact that the proposal rejected was the best possible offer.
The company has announced that it will pursue a separate strategy in Italy, and “vigorously pursue market share gains”.
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