The parent companies of Three Italia and Wind are to merge the two mobile operators and create a joint venture as they bid to better compete in the Italian telecoms market.
CK Hutchison Holdings and VimpelCom will each hold 50 percent in the new JV, Hutchison 3G Italy Investments, which is forecast to deliver savings in excess of €5 billion.
The new company will bring together 31 million mobile customers and 2.8 million fixed line, mainly broadband, customers, putting it on an equal footing with rivals Telecom Italia and Vodafone.
CKHH and VimpelCom said they hoped to conclude the deal within 12 months.
The combined business, which had revenues of €6.4 billion last year, will be led by Maximo Ibarra, the current CEO of Wind.
Three Italia CEO Vincenzo Novari will be appointed as senior adviser for Italy to CK Hutchison and will serve as a CK Hutchison nominee on the JV’s board after the transaction completes.
Dina Ravera, Three Italia’s COO, will lead the merger integration process and remain in a senior operating role in the combined business.
Stefano Invernizzi, the current CFO of Three Italia, will become CFO of the combined business.
The management will be supported by a board of six, comprising three members from each parent company.
The Chairman of the board will rotate between the two parent companies every 18 months and will have a casting vote on certain fundamental business matters.
Jean-Yves Charlier, CEO of VimpelCom said: “This is a transformational merger for the Italian market.
“The two entities will become a leading operator in Europe’s fourth largest telecoms market, delivering a convergent player that will accelerate the ability to invest in the network, services and digital innovations.”
Canning Fok, Co-Group Managing Director of CK Hutchison, said: “This deal represents a major milestone for our Italian business.
“The combination of 3 Italia and WIND will create a financially sound and efficient operator that is able to compete head-on in the market place.
“This joint venture will give the combined business the scale and strength to offer Italian consumers and businesses a state of the art network with greater 4G coverage and higher speeds.”