Hutchison's telecoms bid in Italy hits snag

Telecom Italia's discussions with Hutchison Whampoa over a proposed merger of their Italian mobile-phone assets have stalled amid disagreements over valuation, according to people familiar with the matter.

Telecom Italia directors, three months after agreeing to examine a combination with Hutchison's H3G unit, would probably decide on halting the project at a meeting this week, said two of the people.

Telecom Italia executives intended to focus on spinning off the company's fixed-line assets, a plan approved by its board at the end of May, they said.

While Telecom Italia could revisit a wireless merger in the future, putting the plan on hold would be a lost chance to consolidate in Europe's overcrowded mobile-phone industry through a combination of Italy's biggest and No4 carriers.

In Ireland, Hutchison last week agreed to acquire Telefonica's local unit for US$1.1 billion.

While H3G has a so-called fair value of €1.5 billion (HK$15.1 billion), the lack of clarity on how much of the carrier's accumulated losses could be used to offset taxes meant the price could differ by billions of dollars, a source said in May.