ROME: CK Hutchison Holdings Ltd. and VimpelCom Ltd. agreed to combine their Italian telecommunications units in a deal valued at 21.8 billion euros ($24 billion), creating a carrier that would unseat Telecom Italia SpA as the country’s largest wireless provider by customers.
The 50-50 venture will pool the assets of 3 Italia, which is closely held by billionaire Li Ka-shing’s Hutchison, and VimpelCom’s Wind Telecomunicazioni, the companies said Thursday. Wind Chief Executive Officer Maximo Ibarra will take the same role in the enlarged entity, while 3 Italia Chief Operating Officer Dina Ravera will oversee the integration.
Europe’s fourth-largest economy is the last major telecommunications market in the region that hasn’t seen consolidation as competition weighs on call and data prices. A merger of two competing networks would reduce the number of national wireless carriers to three from four, following similar moves in Germany, Ireland and Austria.
“This is a transformational merger for the Italian market,” VimpelCom CEO Jean-Yves Charlier told investors.
The transaction, which requires approval by European antitrust regulators, would create a carrier with more than 31 million customers and 6.4 billion euros in 2014 sales. The companies are targeting annual savings of 700 million euros as they try to create a stronger and more efficient rival to Telecom Italia and Vodafone Group Plc’s local unit.
Shares of VimpelCom, whose largest shareholders include Russian billionaire Mikhail Fridman and Telenor ASA of Norway, fell 1.2 percent to $5.77 at 12:33 p.m. in New York. The stock surged 16 percent on July 29 after Bloomberg reported that a merger agreement was imminent. Hutchison shares rose 1 percent to HK$114.20 in Hong Kong earlier Thursday.
