Why Xavier Niel and Free are turning their backs on the Paris Bourse – archyde

Iliad and the Paris Bourse, it’s over soon. Xavier Niel, its founder and owner, kicked off on Thursday the public offer to buy back the shares of the group that he does not yet own. This will end on September 24. At its end, if the number of shares not presented does not weigh more than 10% of the capital and voting rights of Iliad, a withdrawal procedure from the Stock Exchange will be initiated within the following three months.

It should only be a formality. Today, Xavier Niel already holds more than 84% of Iliad’s capital via his holding company HolCo II, against a little more than 70% on July 30, when the transaction was announced. The offer appears generous for minority shareholders. Its price, of 182 euros per share, represents a premium of 61% compared to the price on July 29. For Xavier Niel, this share buyback could cost him, in fine, up to 3.1 billion euros.

Very expensive networks

Why the devil does Xavier Niel want to say goodbye to the Paris Bourse? To find “Its freedom and strategic independence”, dixit Thomas Reynaud, the group’s CEO, at Figaro last month. “Our very proactive investment policy has created high volatility in our stock market price, he added. We are now in an unprecedented investment cycle with 5G, fiber and our international expansion. “

However, this expenditure, which amounts to billions of euros, displeases many investors today. They wonder if these investments will pay off properly in the years to come. Above all, everyone noted that it was very difficult for Free, like its rivals Orange, SFR and Bouygues Telecom, to increase their margins in a context of strong competition, and therefore of price wars. The operators have tried, on several occasions, to consolidate the market in recent years. But all attempts to find a telecoms sector with three major players have systematically collapsed. And today, that prospect seems more distant than ever.

Strong increase in investments

In this context, Iliad’s offensives to extend and develop its networks, such as its international shopping, are sometimes – to put it mildly – badly perceived. In addition to the 1.6 billion euros recently offered to acquire the Polish operator UPC, Thomas Reynaud recalled that in the first half of 2021, Iliad had invested 1 billion euros. “And it will probably be double over the whole year”, he added.

This distrust of investors, Iliad has largely paid the price. If in January 2018, its price was flirting with 200 euros, it was only 120 euros a year later. In 2020, he first recovered, regaining 170 euros, before plummeting, once again, to 118 euros until the announcement, at the beginning of the summer, of the offer of repurchase of shares. The course then logically flew away.

Xavier Niel in the wake of Patrick Drahi

The withdrawal of Iliad from the Stock Exchange is in the wake of that of Altice Europe, the parent company of SFR. Patrick Drahi, its leader, did not hesitate last January to spend more than 3 billion euros to win 92% of the capital of his group, and also regain his “independence”. His approach was very similar to that of his rival: what is the point of staying listed if it is to wipe the wrath of investors, whose disenchantment with telecoms is going crescendo ? Patrick Drahi and SFR did not only have happy memories in the markets. In 2017, he suffered a stock market storm linked to SFR’s strategic mistakes, which had led to a massive flight of subscribers.