May 21 (Reuters) - French telecoms group Iliad reported a 1.2% increase in first-quarter core earnings on Thursday, as it continued to rack up new subscribers in Italy despite intense competition in its biggest market, France.
Total earnings before interest, taxes, depreciation and amortisation after leases (EBITDAaL) in the first three months of 2026 were EUR942 million ($1.1 billion) on organic revenue growth of 3.3%. Italy posted the biggest core profit jump, with a 25% year-on-year surge to EUR111 million.
The unlisted group, owned by French tech tycoon Xavier Niel, added 200,000 subscribers in Italy, while customer growth in France and Poland remained flat despite higher fibre adoption.
Iliad is known for its no-frills mobile plans, which disrupted the highly regulated telecoms markets in France and Italy after their respective launches in 2012 and 2018, triggering intense price competition among operators.
The group's bottom-line free cash flow, the money left over after debt costs and government spectrum payments, nearly doubled to EUR416 million, helped by lower licence fees. It said it expected to generate more cash in 2026 than it did last year.
Iliad is in exclusive talks, extended until June 5, with Altice France to buy rival operator SFR in a consortium led by Bouygues and alongside Orange. The proposed deal values SFR at EUR20.35 billion and would allow Iliad to acquire nearly a third of the assets, mainly in business-to-consumer and infrastructure.
Iliad CEO Thomas Reynaud told reporters in a post-earnings call that the discussions were ongoing and all parties were taking a constructive approach.
"This is an extremely complex transaction, more complex than even the most complex deals, and the outcome remains uncertain," Reynaud said.
($1 = 0.8598 euros)
(Reporting by Gianluca Lo Nostro, Leo Marchandon and Rihab Latrache in Gdansk; Editing by Matt Scuffham and Milla Nissi-Prussak)
By Leo Marchandon and Gianluca Lo Nostro
