Billionaire Xavier Niel has announced plans to take his Iliad telecom group private in a move that has sent his fortune soaring.
Niel, who owns around 70% of Iliad alongside a controlling stake in French newspaper Le Monde, announced on Friday a “simplified public tender” offer for Iliad shares at an offer price of $216 (182 euros) per share, representing a premium of 61% to Thursday’s closing share.
The proposal sent the stock up 61% on the Euronext Paris, boosting Niel’s net worth by $3 billion as of Friday afternoon, to an estimated $10.4 billion.
“Iliad is now entering a new phase in its development, requiring rapid changes and major investments which will be easier to undertake as an unlisted company,” Niel said in a statement. “Our ambition for Iliad is to accelerate its growth to make it a leading telecommunications player in Europe.”
Niel launched free in 1999, four years after investing in France’s first internet provider, WorldNet, which he sold at the height of the dot-com boom in 2000 for more than $50 million. Iliad has since become a giant in European telecoms, with 15,000 employees, 42.7 million subscribers and $7 billion in revenues in 2020.
Its Free subsidiary is France’s second largest supplier of home internet and one of the country’s most popular mobile phone providers. Its footprint across Europe is growing with new operations in Ireland, Italy and Poland gaining more market share as Niel continues with the tried-and-tested formula of offering low prices on monthly subscriptions.
Once described by former French Nicolas Sarkozy as a “peep show man” during the bidding for French newspaper Le Monde in 2010, Niel has risen to become one of the best-known faces among a select few self-made French entrepreneurs to hit billionaire status without coming from dynastic wealth or building a fortune in the luxury sector.
Although largely unknown outside mainland Europe, Free is France’s most celebrated technology company. The live product release shows for Free’s latest Freebox technology borrow heavily from the Steve Jobs-Apple playbook, and a fanbase of so-called “Freenautes” eagerly await announcements of future products on Free specific news websites in France.
Speaking to Forbes before today’s announcement, Jean-Michel Salvador, telecom analyst at Alpha Value, says that Free’s rise comes from building a fanbase of early internet users, and driving down the price for access. “Xavier Niel is a geek but also a genius in terms of pricing–20 years ago he said that the price to have TV on your box should be €30 per year and it is quite still the case.” Salvador adds that Niel has built a “double image” as a controversial “public agitator” and “cheap innovator” which has won over more customers than its competitors over the past ten years.
However, according to Salvador, the customer base has now settled and the “growth story” has clearly slowed. Alongside new regulatory requirements, Free has had to wake up to its responsibilities as one of Europe’s major internet providers, which has in turn suppressed the share price performance.
There are other signs that Free, as a technology company and market leader, is experiencing growing pains. In June, a Canadian non-profit reported that Free’s hosting servers were responsible for 48% of the child sexual assault imagery they found during a three-year investigation. The data was later supported by a second non-profit, The Internet Watch foundation (IWF), which told Forbes that within France Free’s hosting service was responsible for 33% of the total French hosted child porn in 2020.
Free has now made changes to the hosting service in question and a Free spokesperson told Forbes: “Our Group takes child protection issues extremely seriously and has worked closely with the French authorities for many years in order to identify and remove any illicit content that may transit via our services.”