CK Hutchison will be placing a new call to Italy

CK Hutchison will have to dial back into the telco M&A party in Italy. The Hong Kong conglomerate’s plan to spin off the wholesale telecommunications business at its Italian subsidiary, Wind Tre, has fallen apart Fast-tracking a different deal in the hyper-competitive Italian market is now boss Victor Li’s priority.

The 3.4 billion euro deal, announced in May, was part of CK Hutch’s asset-light strategy for Wind Tre. By carving out the wholesale operations and network equipment and selling control to Sweden’s EQT Infrastructure, the mobile operator would have freed up resources to better compete against Vodafone, Iliad, Swisscom’s Fastweb and Telecom Italia. An intense price war is eroding profitability in the five-player market, where average revenue per user is among the lowest in Europe.

Consolidation looms. France’s Iliad has unsuccessfully approached Vodafone at least twice about an Italian merger; the latter has also been considering some form of combination with Fastweb in the country, according to media reports. CK Hutchison has only held “exploratory talks” with Fastweb and Iliad, Bloomberg reported in December.

Li has reason to pick up the pace. His Hong Kong-listed telecoms-to-ports empire trades at a more than 70% discount to its book value, compared to par in 2016, LSEG data show. A smart deal in Italy could help. Reuters