Hong Kong’s CK Hutchison and Amsterdam’s VimpelCom have received EU clearance to combine their Italian telecoms businesses.
The merger of 3 Italia, CK Hutchison’s outfit, and VimpelCom’s Wind Telecomunicazioni will give birth to a new 50/50 joint venture that will cater for more than 31 million mobile customers and 2.8 million fixed-line users in the country.
Synergies created through combining Italy’s third and fourth-largest operators are expected to unlock €7 billion of investment in the country's digital infrastructure. They will also generate capex and opex benefits with a net present value, net of integration costs, in excess of €5 billion.
The two companies said in a joint statement that the venture “will create a stronger new operator in Italy, drive competition and support the rapid changes in the market as demand for data and digital services increases”.
The delivery of mobile broadband will also support the Italian government’s goal to achieve 85 percent of 100Mbps broadband national coverage by 2020. The investment will complement the Enel Open Fibre project supported by Wind.
“This joint venture will unlock major investment in Italy's digital infrastructure, creating a telecoms company with the scale and strength to offer world-leading telecoms services with greater reliability, coverage and speed. The joint venture will ensure Europe's fourth largest telecoms market remains a leading player in the global digital economy,” said Canning Fok, CK Hutchison Group’s co-managing director, in a statement.
“The joint venture will also benefit from a healthier debt profile and will be in a position to deliver solid deleveraging in the medium term,” added Jean-Yves Charlier, chief executive of VimpelCom.
The deal, which remains subject to national regulatory approvals, is expected to be complete in the fourth quarter of this year.
Owned by Li Ka Shing, Hong Kong's richest man, CK Hutchison also operates in Hong Kong and Macau, Indonesia, Vietnam, Sri Lanka, Austria, Denmark, Ireland, Sweden and the UK. VimpelCom offers services in 14 markets including Russia, Italy, Algeria, Pakistan, Uzbekistan, Kazakhstan, Ukraine, Bangladesh, Kyrgyzstan, Tajikistan, Armenia, Georgia, Laos, and Zimbabwe.