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The telecoms subsidiary of Li Ka-shing's Hutchison Whampoa operates in six European countries. Photo: Edward Wong

Fresh from Irish deal, Hutchison eyes Italian telecom tie-up

Hutchison Whampoa has resumed talks with Russian telecommunications group Vimpelcom over merging their Italian mobile firms, encouraged by Hutchison's getting the go-ahead last week for an acquisition in Ireland, several people familiar with the situation said.

Hutchison Whampoa has resumed talks with Russian telecommunications group Vimpelcom over merging their Italian mobile firms, encouraged by Hutchison's getting the go-ahead last week for an acquisition in Ireland, several people familiar with the situation said.

"The talks are live again," said one of the sources, who asked not to be named.

Hutchison is part of the Cheung Kong group controlled by Li Ka-shing. Companies in the group recently launched a string of deals including an offer to buy a gas pipeline firm in Australia, a telecommunications company in Ireland and an airport car parking firm in Canada.

The deals fuel talk, firmly denied by Li, that he is reducing his exposure in Hong Kong by expanding overseas.

Now Hutchison is turning its attention back to Italy, where its 3 Italia is the smallest of the country's four network operators, behind Telecom Italia Mobile, Vodafone and Vimpelcom's Wind subsidiary.

Vimpelcom had hired Morgan Stanley to advise on the deal, while Goldman Sachs was working with Hutchison, the sources said. Mediobanca was also expected to have a role, they said.

The parties have held talks on and off for over six months and came very close to agreeing a deal in December last year.

The clearance of Hutchison's acquisition of O2 Ireland, together with a partial refinancing of Wind's debt, had created a momentum for the deal to happen, the sources said.

Wind's debt of €9.5 billion (HK$100 billion) has long been a hurdle to a deal, but the terms of a debt refinancing plan in April specifically allowed for a change of ownership.

Hutchison's 3 Ireland subsidiary finally got approval last week to acquire bigger rival O2 Ireland from Telefonica for US$1 billion in cash, after lengthy negotiations with competition regulators.

The deal is just the latest move by Hutchison's telecommunications subsidiary 3 Group to strengthen its position in Europe, where it operates in six national markets. Eighteen months ago, its 3 Austria unit acquired French group Orange's Austrian subsidiary for US$1.7 billion.

This article appeared in the South China Morning Post print edition as: Hutchison, Vimpelcom resume talks
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