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A pedestrian uses his mobile outside a 3 Italia phone store in Rome, operated by CK Hutchison. The Italian unit is merging with VimpelCom’s Wind Telecomunicazioni, in a deal valued at€€21.8 billion. Photo: Bloomberg

CK Hutchison and VimpelCom join forces to pursue €7bn in Italian investments

The 21.8 billion merger will establish the biggest mobile network operator in Italy, Europe’s fourth-largest telecommunications market

CK Hutchison Holdings and Amsterdam-based VimpelCom are gearing up to push 7 billion (HK$60.42 billion) in new investments into Italy, as the two companies completed the merger of their telecommunications businesses in the country on Monday.

The close of that transaction, which combines CK Hutchison’s 3 Italia and VimpelCom’s Wind Telecomunicazioni under a 50-50 joint venture, has come two months after it received approval from the European Commission.

“Today marks a major milestone in the development of Italy’s digital economy,” CK Hutchison Group co-managing director Canning Fok Kin-ning said.

“Not only will the transaction create a strong new competitor in the Italian market, it will also provide significant additional investment to drive development of Italy’s digital infrastructure.”

The merger, valued at 21.8 billion, will establish the biggest mobile network operator in Italy, Europe’s fourth-largest telecommunications market.

It is also one of the largest mergers and acquisition deals to be completed in Italy since 2007, according to CK Hutchison and VimpelCom, who did not provide details about their investment programme.

They estimated the joint venture will generate significant capital spending and operational expenditure benefits, with a net present value – less integration costs – in excess of €5 billion.

The combined 3 Italia and Wind operations will have more than 31 million mobile subscribers and 2.8 million fixed-line customers.

We can now ... build a world-class 4G network in Italy
Jean-Yves Charlier, the chief executive of VimpelCom

Jean-Yves Charlier, the chief executive of VimpelCom, said customers “will see real benefits in terms of call quality and strengthened data services as soon as 2017, as the two companies integrate their networks and combine their engineering prowess”.

“We can now ... build a world-class 4G network in Italy,” Charlier said.

CK Hutchison, controlled by Hong Kong tycoon Li Ka-shing, and Nasdaq-listed VimpelCom received the go-ahead from regulators after the two firms agreed to divest a certain amount of radio spectrum assets to allow French mobile network operator Iliad to compete in the same market.

Under an infrastructure-sharing arrangement, Iliad will piggyback on the venture’s several thousand mobile base station sites in Italy until the French operator has built its own mobile network.

CK Hutchison’s telecommunications division includes wireless and fixed-line operations in Hong Kong and Macau; mobile businesses in Indonesia, Vietnam and Sri Lanka; and in Europe, mobile operations in Austria, Denmark, Ireland, Italy, Sweden and Britain. The company’s shares rose 0.37 per cent to close at HK$95.85 on Monday.

This article appeared in the South China Morning Post print edition as: CK Hutchison, VimpelCom in Italy push
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