The European Commission has approved a proposed telecommunications joint venture between Hutchison and VimpelCom (VIP) in Italy.
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Hutchison and Amsterdam-based VimpelCom received the go-ahead on the condition that the two parties divest sufficient assets that will allow Iliad to compete in the same market, according to the commission.
Hutchison Holdings won European Union approval on Thursday for the planned merger of its Italian mobile unit with that of VimpelCom, after pledging to help French maverick Iliad enter the Italian market. “It also shows they can grow by cross-border expansion, such as Iliad in this case”, Vestager said.
Hutchison, parent of mobile operator Three Italia, agreed to combine its operation with VimpelCom’s Wind Telecom in a €21.8 billion (HK$188.47 billion) merger in August previous year, in what was to be Italy’s largest deal since 2007.
In a joint statement, CK Hutchison and VimpelCom welcomed the EC’s approval, saying the joint venture will unlock Euro 7 billion of investment in Italy’s digital infrastructure, with consumers benefiting from significantly increased download speeds and 4G coverage, greater reliability and stronger competition.
It comes as Hutchison is challenging the European Commission’s decision last May to derail a £10.25bn takeover of Telefonica-owned O2, amid concerns that the deal would hamper competition and push up bills in the British mobile market.
The companies confirmed that the merged entity will have over 31 million mobile customers and 2.8 million fixed line customers, of which 2.5 million are fixed broadband customers. “On completion, the combined business will not only be good for consumers, businesses and the economy in Italy but will also deliver long-term value to its shareholders”.
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Canning Fok, CK Hutchison Co-Managing Director, commented: “Today is a good day for businesses and consumers across Italy. This joint venture will unlock major investment in Italy’s digital infrastructure”, Hutchison said in joint statement. It is expected that the transaction will complete in fourth quarter of 2016.
