Hutchison seeks EU approval for Vimpelcom merger
Hutchison Holdings has started formal proceedings to get EU approval for merging its Italian mobile telecoms business with Vimpelcom’s.
This comes at a time when it is still in the throes of trying to win approval for its UK bid to create Britain’s biggest mobile operator.
The two companies formally gave notification of their merger plan to the European Commission on Friday, according to a filing on the EU executive’s website, with a decision due by March 11.
The proposed merger of 3 Italia and Vimpelcom’s WIND Telecommunicazioni is expected to come under close scrutiny because it will reduce the number of mobile network operators in Italy from four to three.
Competition regulators think this reduction could lead to higher prices for phone users.
But Hutchison argues that by cutting costs the new combination of WIND and 3 Italia would be a more effective competitor against Telecom Italia and Vodafone.
The Hong Kong conglomerate, whose last two acquisitions in Austria and Ireland brought a similar reduction in the number of operators and were cleared only after it agreed to make concessions, said it was confident of getting approval for the Italian deal.
“This transaction will ensure that there is a strong third player in the Italian market that is able to compete head-on in the market place against the two larger operators,” it said in a statement.
Russian billionaire Mikhail Fridman’s LetterOne fund owns 47.9% of Vimpelcom’s voting rights.
The Commission can either clear the deal, with or without conditions, or open a full-scale investigation if it has substantial concerns.
Hutchison may have to offer concessions similar to those granted with 3 Group’s acquisitions of O2 in Ireland and Orange Austria.
The EU competition regulator last week warned Hutchison of the concerns it had for competition in the UK market from Three’s proposed £10.3 billion takeover of Telefonica’s O2 UK, which will also reduce the number of mobile network operators there to three from four.
Hutchison is expected to offer concessions later this month and may seek a closed-door hearing where it will seek to persuade senior Commission officials and national competition agencies of the merits of the deal.
The Commission is scheduled to rule on the case by April 22.
