By Manuela Mesco
MILAN--Italy's largest telecommunications operator Telecom
Italia (TIT.MI) said Thursday it had pulled out of a deal with H3G,
part of Hutchison Whampoa (HUWHY, 0013.HK), as there were "no
elements to start a negotiation", the company said in a
statement.
No further details were provided.
Last April, Telecom Italia had started discussing a possible
integration with H3G, aiming at potentially merging the Italian
mobile activities of the two companies. But Hutchison Whampoa said
it must become Telecom Italia's leading shareholder before talks
could go ahead.
Chief Executive Franco Bernabe previously said that "antitrust
implications and other hurdles" could make the deal
complicated.
After mandating board members to examine the feasibility of the
operation and whether it could be beneficial for Telecom Italia,
the company suspended talks for a period as it dealt with another
important project--the spliting off of its fixed line access
network. The Italian firm eventually approved the separation of
that asset into a new company in May.
Hutchison Whampoa is not new to negotiating deals with European
telecom operators, particularly as acquisitions in the
well-regulated markets of Europe can provide stable cash flow
despite the region's economic struggles.
The Hong Kong company recently bought Telefonica SA (TEF)'s
Irish business, 02 Ireland, for up to 850 million euros ($1.1
billion), while last year it acquired Orange Austria, the country's
third-largest mobile operator, from France Telecom SA for $1.7
billion.
The Chinese conglomerate led by billionaire Li Ka-shing had also
contacted another Italian mobile operator, Wind, for a possible
integration, a person familiar with the matter recently said. Wind,
controlled by Russian company VimpelCom, declined to comment.
There have long been calls for Europe's telecom
sector--particularly in the troubled economies of the south--to
consolidate in order to boost investment and revenue.
Write to Manuela Mesco at manuela.mesco@dowjones.com
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