Iliad, which runs the Free telecoms and internet service, said the capital increase would be priced at 120 euros per share, marking a discount of around 2.4% to Iliad's closing price of 123 euros on Jan. 17.

Last November, French billionaire Xavier Niel said he was ready to pour the 1.4 billion euros into Iliad to show his commitment to the telecoms group he founded and majority owns, despite several tough financial quarters for the group.

(Reporting by Sudip Kar-Gupta; Editing by Christian Schmollinger)