Hutchison/Telecom Italia merger plan fans flames of political opposition

Deep-rooted political opposition looks set to be the first major obstacle to any potential deal between Telecom Italia and Hutchison Whampoa, as politicians and unions voice concerns over the strategic nature of the Italian operator's fixed-line network.

According to Reuters, it appears increasingly likely that debt-ridden Telecom Italia may have to sell its fixed-line network to the state before any tie-up with the Hong Kong-based company can take place. This is because the network, estimated to be worth between €12 billion ($15.7 billion) and €15 billion, is too strategic to fall into foreign hands.

"If Telecom ended up under the control of Hutchison, the key issue would be the fate of the network and of its enormous data asset base," Paolo Gentiloni, centre-left politician and former communication minister, told Reuters.

A possible solution to the problem could be to carve out the network and sell a significant minority stake in it to state-backed fund Cassa Depositi e Presetiti (CDP). Gentiloni said another option could even be for Telecom Italia to sell its entire stake in the network, Reuters said.

However, it's also not clear whether or not the fixed-line network would be a must-have for Hutchison in the event of a tie-up. Reuters quoted Nomura analyst James Britton as saying that the Hong Kong company's interest may evaporate if Telecom Italia's strongest asset is not included in the deal.

An added layer of complexity is the ongoing political gridlock in Italy following inconclusive elections in February.

Hutchison is targeting up to 29.9 per cent of Telecom Italia and would merge its 3 Italia mobile unit into the Italian incumbent operator, Reuters cited unnamed sources close to the situation as saying.

For more:
- see this Reuters article

Related Articles:
Hutchison wants control in Telecom Italia merger plan, according to reports
Telecom Italia in 'preliminary' merger talks with Hutchison's 3 Italia
Telecom Italia aims to win LTE launch race, but Vodaofone may spoil party
Telecom Italia, Vodafone and Wind caught in Italian antitrust probe
European LTE to move forward with UK, Italy launches
Vodafone Italia mulls investment in Metroweb fibre network

Suggested Articles

Sprint said it will offer discounted service to customers age 55 and above.

Unlimited data plans placed a strain on carrier networks last year, but according to OpenSignal the carriers met the challenge.

Verizon plans to bring 5G to four U.S. cities this year and hopes to have standards-based equipment in place for some of those deployments.