• Iliad has ambitious plans to be a bigger European operator
• It has struck a deal to buy cable operator UPC Poland from Liberty Global
• The move adds fixed line infrastructure and customers to its existing mobile operation in Poland
• Does Iliad kingpin Xavier Niel have his eyes on expansion into other markets?

As flagged in July, Iliad is adding to its assets in Eastern Europe with the acquisition of cable network operator UPC Poland from Liberty Global in a deal valued at €1.53 billion. 

Iliad, best known for being a successful competitive service provider in France and Italy and which is in the process of being taken private by its founder Xavier Niel, had noted during the summer it was in early talks to add the fixed line operator to its existing asset in Poland, mobile operator Play, which it acquired last year and which is being used as the vehicle to acquire the cable operator. (See France’s Iliad buys Polish mobile operator Play.)

Now the deal is agreed and is set to close early next year. Once combined, Play (which offers services under the P4 brand) and UPC Poland will be the country’s second biggest operator (behind Orange), with annual revenues of about €2 billion and about 17 million customers, of which 15.6 million would be mobile customers and over 1.3 million fixed broadband subscribers (as well as some cable TV customers) from UPC Poland. 

The chart below from Iliad’s presentation to investors about the acquisition provides a good overview of the competitive landscape in Poland. 

Iliad has said all along that this deal is about adding fibre access network assets to its portfolio. "The acquisition of UPC Poland comes with a willingness to accelerate investment in fibre network,” noted Iliad Group CEO Thomas Reynaud. “At iliad/Play we are determined to invest in next-generation mobile and broadband networks and services. This long-term ambition to foster nationwide connectivity will contribute to the digital transformation of the Polish economy and benefit the consumers and businesses with more innovative and comprehensive offers.”

It will be interesting to how that fibre investment takes shape: Play will be inheriting a cable network – Liberty Global describes the infrastructure as a “fibre-rich HFC [hybrid fibre coaxial] network” – so Play/Iliad will need to decide whether that infrastructure is good enough to support its services strategy and to continue building out in the same vein, or whether it will expand with pure fibre and even replace the HFC cable with fibre, which is the route that Virgin Media O2 is taking in the UK. 

The other big question is... what will Niel do next? He wants to take Iliad private so he can accelerate his growth plans – he has aspirations for Iliad to be a “leading telecommunications player in Europe.”

The operator has mobile and fixed operations in France, will soon have the same in Poland, and has made moves this summer to ensure that the Italian mobile operations will also soon have fixed network support. (See Plotting a fixed market entry, Iliad signs its second fibre deal in Italy.)

Niel also holds a majority stake in Eir, the national operator in the Republic of Ireland, via an investment firm called Toohil Telecoms Holdings, and has attempted to shake up the market with a low-cost mobile service offering via an Eir-hosted MVNO called GoMo. But even if he built on that position, the Irish market is relatively small and would move the needle much on Iliad’s financials or customer numbers.

So are there other markets ripe for the Iliad playbook? Niel is nothing if not bold and his decision to take Iliad private suggests he may have some plans that others (shareholders) might regard as too risky... and we can’t wait to find out what those plans might be!

- Ray Le Maistre, Editorial Director, TelecomTV