The European Commission’s (EC’s) competition watchdog has approved the proposed EUR21.8 billion (USD24 billion) merger of Italian telcos Wind Telecomunicazioni, which is owned by VimpelCom, and CK Hutchison subsidiary 3 Italia. Although the deal would have reduced the Italian mobile sector from four players to three, the pair’s offer to sell a package of spectrum and physical assets to French firm Iliad will enable it to set up as a new mobile network operator (MNO), thus keeping the market at four players and appeasing regulatory concerns.
EC competition commissioner Margrethe Vestager said: ‘Mobile services are an important part of our daily lives. Today’s decision ensures that the Italian mobile sector remains competitive, so that consumers can continue to enjoy innovative mobile services at fair prices and on high quality networks. We can approve the deal because Hutchison and VimpelCom have offered a strong remedy that enables a new mobile network operator, Iliad, to enter the Italian market.’ Hutchison has obviously learned from past experiences; earlier this year Vestager blocked the merger of UK cellcos 3 and O2 on competition grounds, but in that case no remedy package was offered to ensure the market continued with four players.
The combination of Wind and 3’s mobile operations will create a business with around 31 million subscribers, enough to leapfrog competitors TIM and Vodafone to take top spot in the Italian wireless market. Meanwhile, although Iliad managed to shake up the French mobile sector when it launched as the fourth player several years ago, it faces a tougher prospect in Italy, where competition is already fierce and it has no fixed line business to build upon. Nevertheless, the French firm is still targeting a 10% share of Italy’s mobile market.