CK Hutchison, VimpelCom get green light from Italy, but concerns remain

CK Hutchison and VimpelCom said they are on track to complete the merger of Three Italy with Wind Italy by the end of this year after they secured regulatory clearance in Italy, but concerns have now been raised that elements of Italy’s 2017 Draft Budgetary Plan could delay the whole transaction.

The project to create a 50-50 joint venture from the two mobile businesses was approved by the European Commission (EC) in September, but the deal was still awaiting clearance from the Ministry of Economic Development (Ministero dello Sviluppo Economico or MISE) in Italy.

That has now been granted, meaning that the two companies are able to proceed with their €21.8 billion ($23.8 billion) transaction to create the largest mobile operator in Italy with more than 31 million mobile and 2.8 million fixed-line subscribers.

The new entity will compete not only with existing players TIM and Vodafone Italy but also with a new mobile player: in accordance with the terms of a remedy package submitted by the two parent companies, France-based Iliad will buy sufficient assets to enable it to launch a fourth mobile operator on the market.

RELATED: EC merger approval paves way for Iliad’s entry to Italy

Iliad will be able to buy spectrum assets in the 900 MHz, 1800 MHz, 2100 MHz and 2600 MHz frequency bands for €450 million; take over or share several thousand mobile base station sites; and use the new joint venture’s 2G, 3G and 4G networks for a transitional period.

However, TeleGeography cited a report in Il Sole 24 Ore that suggested the government’s plan to raise €1.8 billion from the renewal of spectrum licences held by TIM, Vodafone, Wind and Three Italy could complicate the matter. The report indicated that Iliad is not too happy about having to pay a further €300 million to renew the 900 MHz/1800 MHz frequencies that expire on June 30, 2018.

Meanwhile TIM has already outlined its strategy to increase revenue, with a firm focus on network investment as well as fixed and mobile convergence. The operator plans to invest €4.5 billion in its fibre and 4G networks from 2016 to 2018, targeting 98 per cent population coverage with its 4G network by 2018.