Italian mobile operators Wind Telecomunicazioni and 3 Italia are due to ink a long-rumoured merger deal within a few weeks, the FT reported.
According to the report, which cites people close to the discussions, the two parties are in advanced–stage…
Italian mobile operators Wind Telecomunicazioni and 3 Italia are due to ink a long-rumoured merger deal within a few weeks, the FT reported.
According to the report, which cites people close to the discussions, the two parties are in advanced–stage discussions to combine their businesses, with 3’s parent Hutchison looking to acquire a 51% stake in the merged entity.
However, a person familiar with the companies doubted recent media reports, suggesting that the management teams of both Vimpelcom and Hutchison are focused elsewhere. Wind has been “clearly focused on its refi and tower disposal, with Vimpelcom managing these situations and also the resolution at Algerian business Djezzy”. Hutchison, in the meantime is “one hundred per cent focused on the agreed purchase of O2 in the UK”.
“Plus, does Hutch want to have two files open with the European competition authorities? It might be better to wait for clearance in the UK.”
Rumours about a potential deal first emerged years ago, with negotiations stalling over ownership issues and valuation.
Last October, Wind owner Vimpelcom, which is partly-owned by Russian billionaire Mikhail Fridman, said that it had failed to reach an agreement regarding a potential 50:50 joint venture in Italy, adding that it might not be able to identify a deal “on terms acceptable to the company”.
Last month, reports suggested that the companies’ shareholders had met at Deutsche Bank’s London office to close a deal.
The deal would ease pressure on highly-leveraged, number three operator Wind, which has struggled to reduce its €10bn debt burden.
Earlier this week, the carrier sealed a €1.8bn loan refinancing deal led by Banca IMI, BNP Paribas, Credit Agricole, Deutsche Bank and HSBC.
It also recently agreed to sell 7,377 telecom towers to Spanish infrastructure group Abertis for €693m (US$774.29m).
Fitch said that the company has managed slowly to increase its subscriber market share, but argued that this is not sufficient to protect it from absolute revenue and EBITDA declines.
“The weak economic environment in Italy continues to weigh on customer sentiment,” the ratings agency wrote in a note.
Hutchison’s move follows four-to-three mergers in Austria and Ireland, as well as a £10.25bn (US$15.3bn) agreement to buy Telefonica’s O2 UK. It also has operations in Denmark and Sweden.
A combined Wind/3 Italia would hold roughly a third of the market, placing it on a par with incumbent Telecom Italia (TI) and Vodafone.
According to Rick Mattila, an analyst at Mitsubishi UFG, “the prospect of consolidation is a positive for Telecom Italia,” which has also been under pressure to reduce its debt levels and upgrade its outdated network infrastructure.
