CK Hutchison and VimpelCom are said to have entered exclusive negotiations with the French telco Iliad over the sale of some of their assets in Italy. Hutchison is looking to merge its Italian mobile unit 3 Italia with VimpelCom’s local subsidiary Wind Telecomunicazioni in a EUR21.8 billion (USD24.2 billion) deal. There are concerns, however, that the proposed merger would not gain approval from European Commission (EC) competition authorities, so the parties have offered to divest a range of assets, including thousands of wireless towers and spare spectrum, in order to ease the EC’s fears by allowing for the creation of a new network operator in the Italian cellular sector, thereby keeping the current four-player setup.
A number of parties have been linked as potential buyers for the spare assets, including Swisscom’s Italian ISP Fastweb and Denis O’Brien, owner of international mobile group Digicel, but a report from Bloomberg says that Hutchison and VimpelCom are now in exclusive talks with Iliad, which is backed by French entrepreneur Xavier Niel. When fixed line operator Iliad joined the French mobile market as the fourth player under the name Free Mobile several years ago its low-cost, flat-rate plans caused a seismic shift in the make-up of the sector; it has since leapfrogged closest competitor Bouygues Telecom to take third spot in the French market. Separately, Niel already has an option to take a stake of around 10% in Italian fixed and mobile provider TIM via an investment company. The EC is set to make a decision on the 3-Wind tie-up by 8 September.