Rivals Iliad, Wind Tre near 5G network deal in Italy

Mobile operator Iliad and rival Wind Tre are nearing a deal to share the costs of rolling out fifth-generation mobile networks (5G) across remote areas of Italy, two sources familiar with the matter said on Thursday.

The agreement would be the latest sign of efforts by Italian telecoms firms to share the cost of expensive investment needed to boost ultrafast connectivity.

Under the deal, Wind Tre, owned by conglomerate Hutchinson , would carve out into a separate company some 7,000 existing mobile sites serving about 27% of the Italian population living in remote areas of the country.

Iliad would buy a 50% stake in the newly-created network unit, to be structured as a 50-50 joint venture, in a deal valuing the whole of the company at between 600-900 million euros, the people added, cautioning the agreement was not signed yet. The joint venture would take on the costs of upgrading to 5G in remote areas.

Iliad, which currently owns some 9,000 active mobile sites in Italy, has a roaming agreement in place to use Wind Tre sites in Italy’s remote areas.

“Anyone in the sector is looking at ways to cooperate to tackle the heavy investment costs needed to roll out high-speed connectivity”, one of the sources said, adding that any agreement would be subject to regulatory approval.

In 2018 Italy raised a bumper 6.5 billion euros in its 5G mobile auction that drew ferocious bidding from telecoms operators battling for an edge in new digital services.

Since then stiffer price competition has led to a steady drop in revenue which has put the sector’s margins under pressure.

Telecoms sector revenue in the country fell almost a third between 2010 and 2020, according to Italian industry group Asstel, with downward pressure on prices growing after low-cost operator Iliad’s entry in 2018.

Owned by French billionaire Xavier Niel, Iliad was allowed to enter Italy as part of the remedy package that Vimpelcom and Hutchison negotiated with European regulators to combine their Italian mobile operations to create Wind Tre in 2016 without altering the number of existing players. Yahoo! Finance