EC green light for Iliad to press Play on Polish mobile acquisition

Iliad Group, the parent company of French operator Free, has received regulatory permission from the European Commission for its offer to take over Polish mobile provider Play.

Play, the most recent entrant to Poland’s mobile telephony market, currently has 15 million subscribers and a 29% market share, making it the country’s leading mobile telephony operator. Over the past 12 months, Play has generated €1.6bn in revenue, up 2% year on year at constant exchange rates, and €523m in EBITDA (earnings before interest, taxes, depreciation and amortization.

The offer, made in September, of €2.2bn for 100% of the share capital of Play means the mobile provider has an enterprise value of about €3.5bn. Iliad has also signed a binding agreement to buy a 40% controlling interest from Play’s two reference shareholders for the same unit price, which will give it the majority of seats on Play’s board of directors.

The initial tender offer received unanimous approval from Play’s board of directors, which noted that the price offered in the tender offer reflects the fair value of the company.

Setting out its rationale for the acquisition, Iliad said it regarded Play and itself as having a lot in common, having both been “game-changers” in their respective markets, opening up mobile usage by proposing offerings accessible to everyone. It added that both groups have powerful brands that are highly respected in their countries and convey the values of innovation, simplicity and value for money.

Iliad sees its expertise and experience helping Play to grow in the mobile market and facilitate its entry into the fixed market. The French firm said it would also help to accelerate the digital distribution of Play’s offerings.

The deal will also see Iliad extend its strategic partnership with wireless telecommunications infrastructure and services company Cellnex to cover Play’s mobile telecoms passive infrastructure in Poland. It will also acquire 60% of the company that will manage Play’s mobile telecommunications passive infrastructure, covering 7,000 sites. The agreement will be transferred to Play when Iliad takes control of it. Play is expected to be receive about €804m.

Iliad said the strategic interest of the partnership was twofold. First, it is designed to strengthen the investment capacity of Play, which is entering a new business development cycle, with the deployment and purchase of 5G frequencies, the densification of its mobile network to accompany growth in usage and a planned entry into the fixed market. Second, it will enable Play to keep full control of its network while facilitating a smooth infrastructure roll-out, ensuring that Play retains its independence to manage the active components of its networks.

Noting its environmental responsibility in extending the footprint of its networks, Iliad said it intends to launch a programme to build about 5,000 cell sites to meet the growing need for connectivity for individuals and businesses in Poland. Under the agreement, the group would undertake to build at least 1,500 of those sites in partnership with Cellnex, representing about €400m over the next 10 years.