By Mathieu Rosemain
PARIS (Reuters) - French billionaire Xavier Niel said on Tuesday he was ready to pour 1.4 billion euros into Iliad (PA:ILD) to show his commitment to the telecoms group he founded and majority owns, despite several tough quarters and a share price plunge.
Iliad, whose cut-price phone deals shook up France's mobile market, was beaten at its own game in recent quarters as a price war dented its market share, undermined its profitability and more than halved the value of shares in the past two years.
Niel, who owns a little more than 52% of Iliad, said in a call with analysts that he heard the frustration of some of the group's shareholders but that he still believed in its strategy.
He said he would fully underwrite a 1.4 billion euro capital increase to finance a share buyback equivalent to nearly 20% of shares, offering disgruntled shareholders a way out.
"I have been disappointed as the first shareholder of the group by the stock price performance over the last few months," Niel said.
"But I believe in the group, its management, its prospects in France and of course in Italy. I'm keen to increase my exposure in the group," he said.
The share buyback program will be carried out at the price of 120 euros per share, a premium of 38% on the basis of the volume-weighted average price over the last three months. The stock closed at 95.06 euros on Monday and rose 17% on Tuesday.
The offer will concern about 11.7 million shares, or 19.7% of the group's capital, which Chief Executive Thomas Reynaud said could mean Niel's stake would rise to 72%, in the absence of any offer from new shareholders.
The group, which competes against Orange (PA:ORAN), Altice Europe's SFR (AS:ATCA) and Bouygues Telecom (PA:BOUY) in France, said in a separate statement that third-quarter revenue rose 8% to 1.34 billion euros.
The growth stemmed from the addition of 32,000 new customers who subscribed to its high-speed broadband offers and 150,000 new mobile customers for its 4G mobile offers.
Iliad also indicated it would pay 2.6 euros per share in dividend. It confirmed its full-year targets, including a return to revenue growth in France and an acceleration of its core operating profit growth in the second-half of the year.