VimpelCom CEO Jean-Yves Charlier said the company “remains confident” that it will secure approval from the European Commission (EC) for the proposed merger of Wind with Three Italy by the deadline of Sept. 8.
The Netherlands-based group, which plans to merge its Italian mobile business with that of CK Hutchison in order to create a stronger rival to TIM and Vodafone Italy, added that it has not yet received a statement of objections from the EC.
It also reiterated that it has formally submitted commitments regarding the merger to the EC, including the plan to sell enough spectrum and other assets to allow a new fourth player to enter the Italian market.
France-based Iliad announced in July that it has agreed to buy these assets as part of a remedy package submitted by CK Hutchison and VimpelCom to the EC to secure approval for the planned merger.
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. 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 billion).
Although the EC is taking a harder stance on mergers that reduce the number of mobile network operators within a member state of the European Union from four to three, and has already blocked CK Hutchison's proposal to buy O2 UK, the promise to create a fourth operator in Italy could persuade it to approve the deal.
Meanwhile VimpelCom also published its results for the first half of 2016, with Charlier saying that the company was in line with expectations during the period in spite of weaker service revenue trends in the second quarter.
Revenue in the first six months was down 14 per cent year-on-year at $4.2 billion (€3.8 billion) in reported terms, although it was 1.8 per cent higher on an organic basis. EBITDA fell 23 per cent in reported terms to $1.55 billion, while the net profit attributable to shareholders improved by 12 per cent to $326 million.
In the second quarter, revenue was 16 per cent lower on a reported basis at $2.15 billion while EBITDA dropped 26 per cent to $795 million. However, underlying EBITDA increased by 3 per cent on an organic basis. Profit attributable to shareholders increased by 29 per cent to $138 million.
“We saw particularly solid performances in Pakistan and Ukraine and mobile data revenue growth was also strong, up 26 per cent, reflecting our strategic focus to transform our business from traditional voice and messaging to data and digital services,” Charlier said.
Wind Italy, which has now been reclassified as an asset held for sale, saw revenue rise by 1 per cent in the second quarter to just over €1 billion due to a 3 per cent increase in mobile revenue. EBITDA was flat at €399 million. Wind also invested €192 million in the second quarter, primarily in the expansion of the LTE network and the existing HSPA+ network.
The operator’s LTE network now covers 62 per cent of the population, up from 56 per cent at the end of 2015.
For more:
- see the VimpelCom results presentation
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