Wind and 3 Italia took a decisive step towards their merger that should take effect at the beginning of 2017. After months of long negotiations Hutchison Holdings, parent company of Italian mobile operator 3 Italia, and VimpelCom, parent company of Wind, finally agreed to form a 50/50 joint venture that will own and operate their telecommunication businesses in Italy.
If current intentions are confirmed, the combined business of 3 Italia and Wind will be led by the current CEO of Wind, Maximo Ibarra, and supported by Dina Rivera as Merger Integration Officer and Stefano Invernizzi as CFO, both from 3 Italia. The current CEO of 3 Italia, Vincenzo Novari, will instead become Special Advisor to Hutchison Holdings.
The potential merger between the two of the major Italian telecommunication operators, one of the largest M&A deals to be done in Italy since 2007, has been in the air for quite some time now. The first rumors can be traced back to May 2015 when the deal was said to be potentially concluded already in the summer. However, during the past year several complications, in particular related to antitrust issues arose, hence time lengthened significantly until nowadays. The merger, slightly modified, was then approved on September 1st by the EU Commission and finally on October 25th by the MISE “Ministero dello Sviluppo Economico”.
The expectations are definitely thriving. By integrating their networks and sharing their technological know-how Wind and 3 Italia will gain scale and a more efficient cost structure, essential elements to be able to offer competitively-priced, innovative products and to compete even more aggressively in the Italian telecommunication market.
The combined company emerging from the transaction will have 31 million mobile customers, 2.8 million fixed line customers and thanks to the collaboration with Enel Open Fiber will offer its services on the market as an integrated operator. In addition, the new joined-firm is also expected to generate significant capital and operating expenditures savings with a net present value, excluding integration costs, in excess of €5 billion.
According to Canning Fok, Co-Group Managing Director of Hutchinson, “This deal represents a major milestone for Italian telecommunication market. The combination of Wind and 3 Italia will create a financially sound and efficient operator that is able to compete head-on in the market place.” Indeed, the rosy prospect is that the new borne joint-venture will give the combined business the scale and the strength to offer Italian consumers and firms a state of the art network with greater 4G coverage and higher speed.
The new group is supposed to commence with rather high leverage but the plan involves a reduction of the debt/EBITDA ratio to around 3 times by 2019-2020, a level which is suitable for a triple B investment rating.
Even with the merger of Wind and 3 Italia, however, consolidation in the Italian telecommunication market is relative. In fact, there will still be four operators in the market since EU Commission, when setting up the conditions of the deal, requested a new entrant in the industry, being the French Internet provider and Mobile operator Iliad Group of Xavier Niel. The latter will therefore characterize the Italian telecommunication market panorama, together with Tim, Vodafone and of course the new Wind-3 Italia colossus.
Matteo Franchello
If current intentions are confirmed, the combined business of 3 Italia and Wind will be led by the current CEO of Wind, Maximo Ibarra, and supported by Dina Rivera as Merger Integration Officer and Stefano Invernizzi as CFO, both from 3 Italia. The current CEO of 3 Italia, Vincenzo Novari, will instead become Special Advisor to Hutchison Holdings.
The potential merger between the two of the major Italian telecommunication operators, one of the largest M&A deals to be done in Italy since 2007, has been in the air for quite some time now. The first rumors can be traced back to May 2015 when the deal was said to be potentially concluded already in the summer. However, during the past year several complications, in particular related to antitrust issues arose, hence time lengthened significantly until nowadays. The merger, slightly modified, was then approved on September 1st by the EU Commission and finally on October 25th by the MISE “Ministero dello Sviluppo Economico”.
The expectations are definitely thriving. By integrating their networks and sharing their technological know-how Wind and 3 Italia will gain scale and a more efficient cost structure, essential elements to be able to offer competitively-priced, innovative products and to compete even more aggressively in the Italian telecommunication market.
The combined company emerging from the transaction will have 31 million mobile customers, 2.8 million fixed line customers and thanks to the collaboration with Enel Open Fiber will offer its services on the market as an integrated operator. In addition, the new joined-firm is also expected to generate significant capital and operating expenditures savings with a net present value, excluding integration costs, in excess of €5 billion.
According to Canning Fok, Co-Group Managing Director of Hutchinson, “This deal represents a major milestone for Italian telecommunication market. The combination of Wind and 3 Italia will create a financially sound and efficient operator that is able to compete head-on in the market place.” Indeed, the rosy prospect is that the new borne joint-venture will give the combined business the scale and the strength to offer Italian consumers and firms a state of the art network with greater 4G coverage and higher speed.
The new group is supposed to commence with rather high leverage but the plan involves a reduction of the debt/EBITDA ratio to around 3 times by 2019-2020, a level which is suitable for a triple B investment rating.
Even with the merger of Wind and 3 Italia, however, consolidation in the Italian telecommunication market is relative. In fact, there will still be four operators in the market since EU Commission, when setting up the conditions of the deal, requested a new entrant in the industry, being the French Internet provider and Mobile operator Iliad Group of Xavier Niel. The latter will therefore characterize the Italian telecommunication market panorama, together with Tim, Vodafone and of course the new Wind-3 Italia colossus.
Matteo Franchello