Swisscom buys Vodafone Italia to merge it with Fastweb: how the market could change

With a good maneuver 8 billion eurosthe Swiss operator Swisscom has entered into binding agreements with the Vodafone Plc Group to acquire 100% of Vodafone Italy on basis cash and debt free. The goal: to merge the provider with Fastwebwhich was in turn acquired by Swisscom in 2013. For the moment this will have no effect on consumersas it will be necessary to wait for authorization from theAntitrust in order to possibly proceed with the actual merger between Vodafone and Fastweb. If everything happens on schedule (and, above all, if there is the green light from the competent authorities), everything could be concluded by the first quarter of 2025.

The idea behind the possible merger is to combine the strengths of Fastweb in fixed connectivity and Vodafone in mobile connectivity. Second Christoph AeschlimannCEO of Swisscom:

The industrial logic of this merger is very solid. Fastweb and Vodafone Italia represent an ideal combination to generate high added value for all stakeholders. As a result, private and business customers will benefit from the most comprehensive offering. Swisscom will also be strengthened overall, allowing us to continue to make significant investments in the Swiss and Italian markets.

The Vodafone-Fastweb agreement: the two companies remain distinct for now

The acquisition of Vodafone Italia by Swisscom does not currently change the cards on the table for consumers in any way: Vodafone and Fastweb continue to operate as two distinct and separate companies because to date, in fact, there has been no merger between the two providers. Both, therefore, will continue to operate under competition. This is because the Antitrust will have to carefully evaluate the impact that an operation of this type could have on the market, and an analysis of this type takes time. At the moment it is not known how long the authorities will comment on the matter.

What are the possible future scenarios

What would be the possible post-merger future scenarios? A first effect would certainly concern the Vodafone brand that, based on the agreements made between the parties, it would disappear 5 years after closing. This in itself might sound quite impressive and in fact it is: the British operator’s brand has now become iconic in Italy, where it landed 22 years ago when it bought Omnitel in 2002.

There will be remodulations in offers? It is difficult to answer this question at the moment because, until the merger takes place, any forecast would be practically unreliable. The only certainty from this point of view concerns the fact that, if contractual changes were to be made that affect current Vodafone and Fastweb customers, these will necessarily have to be notified in time – with a at least 30 days’ notice – and they may eventually decide to withdraw from your contract without paying penalties and various deactivation costs.

It is also difficult to predict what is possible effect that the merger will have on the telecommunications market in general. If we look at the recent past, the merger between WIND and 3 Italia favored the entry of Iliad in the Italian market, which led to a general reduction in prices (partly due to the policy of the French provider). Naturally, it is not certain that there will be an “encore” from this point of view.

Still regarding the effects on the market, the new group would have very strong numbers: we are talking about a potential base of 33 million customers in the mobile sector, equal to 32% of the market. This has already caused some concern. Iliad – which was interested in acquiring Vodafone Italia – spoke of one possible duopoly situation in this particular sector, which would see TIM on one side and the “new Fastweb” on the other.

He doesn’t think so Walter RennaCEO of Fastweb, who instead declared:

This operation marks a turning point for Fastweb and will generate significant value for all stakeholders. Thanks to the superior quality of mobile and fixed infrastructures, the convergent operator that will result from the operation will be able to offer high-performance connectivity and innovative services to all segments of the market. The NewCo will contribute to the evolution of this strategic sector with significant investments in fiber and 5G, innovative ICT services and infrastructure security, thus enabling a rapid digital transformation of families, businesses and the Public Administration.

Ultimately we will have to see if there will be effects on the staff of the two companies. Considering the fact that the merger between Vodafone Italia and Fastweb would give rise to a group with approximately 9000 employeesshould not be excluded any staff cuts due to possible redundancies. Naturally, these are only hypotheses resulting from simple evaluations: neither Vodafone nor Fastweb have commented on this matter.