Why Iliad is going private…some explanations

Xavier Niel announced, on July 30, its intention to acquire for cash all minority shareholders and take Iliad private (a “simplified tender offer” as per French rules, followed, if applicable, by a squeeze-out). Through this operation, Iliad guarantees its strategic independence and secures its steady development.

Iliad went through a major transformation over the past few years. In France we are back to growth, and we have strongly improved the quality of our networks. We are the leading alternative operator in fibre and we benefit from the largest 5G network to serve our 20m subscribers in France.

?We have also exported the “Iliad know-how” beyond our historic borders. We are now the sixth biggest mobile operator in Europe. 46 million Europeans rely on us for their connectivity in France, Italy, Poland, and Ireland. Moreover, the Group has made 10 climate pledges in order to reach carbon neutrality by 2035 and we are going to invest EUR 1 billion over that period to reach this ambitious goal.

?The success of the Iliad Telecom model - but also more broadly of the European Telecom model - is not in question. This success is down to innovation, competition, inclusive prices and great network coverage. This model requires a high level of investment which translated in recent years into valuations being under pressure, especially in comparison with US Telecom operators. But we can be proud of what we have achieved. Our model is very different from other countries’ model, which creates digital exclusion of less favoured households because of high prices, does not promote fibre and leaves apart numerous areas where there is no network coverage.

Iliad has entered into an ambitious cycle of transformation and investment -?a cycle without precedent - that will unfold over the next decade. We are preparing for the future, but that heavy investment cycle does not match market expectations. Equity investors in telecom stocks want significant short term cash generation. We have a long-term vision for the industry, because we know that’s the key to success. We are a company that is not afraid to invest, recruit and grow. Our desire is to speed up our efforts in 5G, fibre, the B2B market and the cloud businesses.

?Through this transaction, we are offering a liquidity window to our shareholders and we guarantee our autonomy: investors get their money back, with significant gain (for instance, an investor who would have invested at IPO and kept her/his shares would make today a money multiple of 11,9x and an IRR of 15,7% IRR over 16 years). Our transaction is good for everyone. This is the right time !

?Other large groups, like Dell, have followed the same path in the past and have become private. It is a logical step in an ambitious program of growth, investment and expansion.

?We are now a European group of 15,000 employers and we will be the second biggest employer in the sector in France by the end of the year. This transaction does not change our desire to keep involving our employees in the economic success of the company. That’s a hallmark of our business. It is the expression of our entrepreneurial way of doing things. Today more than one in two of our French employees is an Iliad?shareholder. It is a huge vote of confidence by our employees. And this employee trust is, by far, our best asset!

?Thomas

?Thomas REYNAUD – ILIAD CEO