Hutchison Whampoa and Vimpelcom are close to agreeing a deal to merge their Italian mobile operations, with an announcement possible later this week, it emerged on Tuesday.
The two companies in May confirmed that they were holding talks that could lead to the formation of a 50:50 joint venture in Italy. The combination of Hutchison’s 3 Italia and Vimpelcom’s Wind would create Italy’s largest mobile operator by subscribers.
Negotiations between the two companies have intensified in recent w eeks, Reuters claimed, citing sources close to the deal. The firms themselves declined to comment though.
One of the newswire’s sources said Hutchison Whampoa managing director Canning Fok met with Vimpelcom executives in London several times recently.
The report added that Vimpelcom is due to present its quarterly results in London on Thursday.
A merged Wind/3 Italia would have claimed a 33.5% share of the Italian mobile market at the end of March, based on the most recent statistics from regulator AGCOM.
Current market leader TIM had a share of 32.3% at the same date, followed by Vodafone with 27%. Wind currently comes in third and 3 Italia fourth.
Wind also has a sizeable fixed-line operation. It takes second place in Italy’s fixed market, but its 13.3 million lines put it some way behind Telecom Italia’s TIM, which has 60 million.
The deal would doubtless attract regulatory scrutiny, since it reduces the number of players in the market, but other similar tie-ups have been approved by the European Commission in recent years, subject to certain concessions.
Mobile market rivals TIM and Vodafone would likely cheer a deal, as it would further ease price pressure.
Earlier this year Telecom Italia CEO Marco Patuano indicated that he is keen to see some consolidation in the market.
At present there are two mobile network operators in Italy focusing on quality while the other two are still seeking to compete on price, he explained at an event in London in February, without naming Wind and 3 as the price aggressors.
"It’s better to have three players all working on quality, all investing," he said.
At the time Patuano did not have high hopes for consolidation in the near future, but "I have a couple of good bottles of champagne in my refrigerator just in case," he said.
