Swisscom has taken a significant step toward acquiring Vodafone Italy after receiving unconditional approval from the European Commission for its EUR 8 billion bid. The deal, which aims to merge Vodafone Italy with Swisscom’s Fastweb unit, cleared the EU’s regulatory process after the investigation expired without objections.
This approval marks significant progress for Swisscom, but the acquisition still faces a crucial hurdle: an in-depth probe by Italy’s competition authority, the Autorità Garante della Concorrenza e del Mercato (AGCM).
Related Operator News: Swisscom Faces Phase II Probe into Vodafone-Italy Deal
AGCM’s Probe: Fixed-Line Concerns
When the AGCM launched its investigation, Swisscom expounded that such inquiries are common in deals of this magnitude. The company continues to argue that the merger between Vodafone and Fastweb is pro-competitive and will benefit the Italian telecommunications market.
The AGCM indicated that while it does not anticipate any issues arising from the combination of Vodafone’s and Fastweb’s mobile operations—due to Fastweb’s small market share as the fifth player behind competitors like iliad, TIM, WINDTRE, and Vodafone—the fixed-line market presents significant challenges.
Also Read: Swisscom Confirms EUR 8 Billion Vodafone Italy Acquisition Remains on Track
Potential Impact on Fixed-Line and FTTH Markets
The watchdog’s preliminary analysis revealed concerns that merging Vodafone’s fixed-line business with Fastweb could considerably reshape competition in an already concentrated market. Currently dominated by TIM, the market consists of four leading operators. The merger would reduce that number to three and significantly boost Vodafone’s market share in fixed-line services from 15-20% to 25-30%, bringing it closer to TIM, whose lead over Vodafone would shrink from 25-30 percentage points to 10-15 percentage points.
Moreover, the AGCM warned that the merger could create a new dominant player in the fiber-to-the-home (FTTH) market. Vodafone and Fastweb’s combined resources would give the new entity a strong position, potentially allowing it to consolidate further in key urban areas, particularly in FTTH technology, which is critical to the future of telecommunications.
“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[s] to FTTH technology) and geographical (with regard[s] to the main urban centers) perspective,” the AGCM stated.
The deal may require pro-competitive remedies if these concerns are confirmed in the AGCM’s Phase II investigation. These could include offering favorable wholesale access to fiber networks for competitors or divesting certain assets to maintain a balanced competitive environment.
Despite these concerns, Swisscom continues to project that the acquisition will close in the first quarter of 2025, maintaining that the deal will foster healthy competition and provide enhanced services to Italian consumers.