Report: Hutchison, VimpelCom pave way for new mobile player in Italy

CK Hutchison and VimpelCom offered to divest sufficient network assets and spectrum to create a new mobile operator on the Italian market in order to secure regulatory approval of the proposed merger of their respective businesses in Italy, Reuters reported.

Citing a European Commission (EC) questionnaire, the news agency said the two companies, which want to combine CK Hutchison's Three Italy with VimpelCom-owned Wind Italy to create a stronger competitor to rivals TIM and Vodafone Italy, have offered to sell more than 8,000 network sites and spectrum in the 900 MHz to 2.6 GHz range and provide a national roaming deal for 2G to 5G technologies over a period of at least five years.

Telecoms consultant John Strand told Reuters that this package might be enough to convince the EC that the proposed merger should be cleared.

"This can create a fourth network player. It will probably deliver what the Commission would like to have," he said.

Such concessions certainly would indicate that CK Hutchison has taken note of lessons learned in the UK: the Hong Kong-based group recently failed in its plan to buy O2 UK and merge it with Three UK because of competition concerns. As is the case in Italy, that merger would have reduced the number of mobile network operators in the UK from four to three.

The EC last week extended the deadline for a decision on the proposed Italy deal by 15 working days from Aug. 18, 2016 to Sept. 8. The commission did not provide any reasons for the delay, as is its usual practice. However, reports suggested that CK Hutchison stepped up its efforts to secure regulatory approval by offering a number of concessions on Jun. 6.

Bloomberg also said last week that Swisscom, Iliad and Digicel Group submitted bids to CK Hutchison and VimpelCom for mobile frequencies and about 5,000 towers that would enable the creation of a new mobile player in Italy.

The commission initially opened an in-depth investigation in March to assess whether the proposed joint venture between CK Hutchison and VimpelCom in Italy is in line with merger regulations.

In August last year, CK Hutchison Holdings and VimpelCom said 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. At the time, the companies hailed the transaction as the largest M&A deal in Italy since 2007, with a total value of €21.8 billion ($24.5 billion).

The transaction would bring together Three Italy and Wind to create a combined company with more than 31 million mobile and 2.8 million fixed-line subscribers in Europe's fourth-largest telecoms market.

For more:
- see this Reuters article

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