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Report: EC could clear CK Hutchison-VimpelCom Italy deal next week

By Anne Morris Aug 26, 2016 7:03am

merger CK Hutchison European Commission Three Italy

The European Commission (EC) could approve the proposed merger of Three Italy with Wind Italy as early as next week, with reports suggesting that regulators have been appeased by efforts to maintain facilities-based competition in the market.

Citing two unnamed sources, Bloomberg said EU competition commissioner Margrethe Vestager is likely to announce the decision in the coming week, which would be ahead of the EC’s provisional deadline of Sept. 8.

CK Hutchison and VimpelCom said in August last year that they had agreed to form a 50:50 joint venture that would own and operate their respective mobile businesses in Italy, bringing together Three Italy and Wind Italy into a single entity. The transaction would create a combined company with more than 31 million mobile and 2.8 million fixed-line subscribers in Europe's fourth-largest telecoms market, competing with Telecom Italia and Vodafone Italy.

In order to ease growing EC concerns over mergers that reduce the number of mobile network operators within a market, the two parent companies agreed a remedy package with Iliad that would see the France-based company buy sufficient network assets and spectrum to launch a new, fourth operator in Italy following the merger.

Reuters has already indicated in an earlier report that the agreement with Iliad would be enough to convince EC regulators to clear the planned merger.

Any operator established by Iliad would ensure that the country remains served by four full MNOs following the merger. The EC has recently taken a tough stance on deals that reduce the number of full MNOs in a market from four to three, with CK Hutchison's plan to merge Three UK with O2 UK a recent high-profile victim of the EC's approach.

That deal was blocked amid concerns that the reduction in full MNO numbers would lessen competition in the UK and so result in consumers paying higher prices for mobile services.

Iliad's deal with CK Hutchison and VimpelCom would involve the transfer of 2x35 MHz frequencies in the 900, 1800, 2100 and 2600 MHz bands at a cost of €450 million ($508 million) to be paid between 2017 and 2019. The operator also agreed to acquire several thousand macro sites in densely populated areas, to create a RAN-sharing agreement or buy several thousand macro sites in rural areas, and to forge a roaming deal covering 2G, 3G and 4G infrastructure.

The operator's strong track record as France's fourth mobile operator could certainly prove attractive to EC regulators when it comes to assessing its likely potential in Italy.

Iliad sparked a price war in France when it established its Free Mobile brand in the market in 2012, and continues to offer competitive tariffs such as one that offers 50 GB of 4G data for €19.99 per month.

For more:
- see this Bloomberg article

merger CK Hutchison European Commission Three Italy VimpelCom Wind Italy