Iliad talks down Italy M&A as subscribers surge

By Leo Marchandon and Gianluca Lo Nostro

(Reuters) -Iliad said on Thursday it was not in talks with Telecom Italia over a potential tie-up, after the French telecoms group reported upbeat earnings driven by strong subscriber growth in Italy.

Telecommunications providers in Italy are pushing for consolidation to overcome intense price competition, aiming to reduce the mobile network operator landscape to three players from four.

Earlier in May, Telecom Italia CEO Pietro Labriola said his company was still pursuing the possibility of a deal with Iliad.

"In Italy, consolidation makes sense for everyone, industry, companies and citizens alike. For Iliad, it's an opportunity, but not a necessity," CEO Thomas Reynaud told reporters.

"I see a lot of executives talking about consolidating the telecoms market in Italy, but there are no talks," he added when asked about Labriola's comments.

Iliad reported a 6% rise in first-quarter core profit to 931 million euros ($1.05 billion), offsetting a 41 million euro increase in the flat-rate tax for network companies in France.

It racked up 258,000 new subscribers in Italy, its second largest market, bringing the total to 12.24 million fibre and mobile customers. Core profit in Italy also jumped 24.4%.

France saw modest growth with 8,000 added subscribers, while Poland saw a slight decline of 3,000 subscribers, notably in the fixed broadband segment.

Reynaud said that Iliad, which is planning to invest 3 billion euros in data centres, is able to pursue investments in AI infrastructure thanks to its commercial momentum.

It joins French data centre peer OVH in championing digital sovereignty against the backdrop of rising geopolitical tensions, with an aim to become a European hyperscaler.

Foreign investors, including U.S. logistics giant Prologis, have committed more than 6 billion euros to French digital infrastructure as part of the Choose France summit.

($1 = 0.8834 euros)

(Reporting by Leo Marchandon and Gianluca Lo Nostro in Gdansk, additional reporting by Elvira Pollina in Milan; editing by Milla Nissi-Prussak)