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Companies reportedly seeking to facilitate new mobile player in bid to win EU support for 3 Italia/Wind deal.
Vimpelcom and CK Hutchison are holding asset sale talks with Sky and Iliad in an effort to win European Commission support for the proposed merger of their Italian mobile operations, it emerged on Monday.
Anonymous sources cited by Bloomberg claimed the parties are also in talks with Swisscom-owned Fastweb and ISP Tiscali.
According to the report, Vimpelcom and Hutchison have offered to sell spectrum and approximately 5,000 cell towers, facilitating the entry of a new mobile operator and easing the Commission’s concerns about the deal’s impact on competition.
For Sky, acquiring mobile assets would make its satellite TV service more attractive to consumers looking for bundled services, and would be in line with its strategy of adapting to new viewing habits.
As for Iliad, the assets would give it the opportunity to bring its disruptive mobile strategy to bear on the Italian market; however, Iliad owner Xavier Niel might have to unwind his position in Telecom Italia.
The entrepreneur has taken a long optional position on 15.14% of Telecom Italia’s share capital. The options are held via his NJJ Holding subsidiary Rock Investment, not Iliad, but Niel’s indirect presence in two competing mobile operators might still raise eyebrows.
The European Commission is in the midst of an in-depth review of CK Hutchison and Vimpelcom’s €21.8 billion agreement – signed in August 2015 – to combine their Italian mobile businesses, 3 Italia and Wind respectively, into a 50:50 joint venture.
If approved, the deal will bring together the country’s third and fourth largest players, creating a new mobile market leader ahead of incumbent Telecom Italia and current number two, Vodafone.
A separate Bloomberg report in late April claimed that the Commission will publish a statement of objections to the merger in June. It does not mean the deal will definitely be blocked, but it is highly likely that strict remedies will be imposed on Hutch and Vimpelcom.
Doubts about the merger’s prospects increased after Brussels blocked CK Hutchison’s plan to acquire Telefonica’s O2 UK unit and merge it with 3UK.
Competition commissioner Margrethe Vestager claimed the proposed transaction would have resulted in higher prices for mobile services in the U.K.
