June 10, 2016 / 5:05 PM / 3 years ago

Hutchison, Vimpelcom ready to divest spectrum, network sites, roaming deal

* Package includes more than 8,000 network sites to new rival

* Companies prepare to give up 900-2,640 MHz spectrum

* Convincing EU new rival can compete is key issue

By Foo Yun Chee

BRUSSELS, June 10 - CK Hutchison Holdings and Vimpelcom have offered to divest a chunk of spectrum, more than 8,000 network sites and a roaming deal to a small rival in a bid to convince EU regulators to approve their planned Italian mobile merger.

The package aims to create a fourth network operator in Italy. The current No. 4 player would be eliminated as a result of the combination of Hutchison’s 3 Italia and Vimpelcom’s WIND, leaving only three network operators.

The European Commission is concerned a three-player market could lead to higher bills for consumers and less competition. Such worries led it to reject Hutchison’s bid to acquire British mobile operator O2 from Spanish provider Telefonica last month.

Hutchison and Vimpelcom are willing to free up frequencies from 900 MHz to 2640 MHz to a competitor, according to a European Commission questionnaire seen by Reuters. The range allows for coverage in cities as well as rural areas.

The new operator would also get up to 5,425 network sites and can also ask for another 3,000. Both spectrum and sites would be made available over several stages to end-2019.

Hutchison and Vimpelcom are also prepared to provide a national roaming deal covering access from 2G to fast-speed 5G services to the rival for five years, with an option to extend it for another five years.

Telecoms consultant John Strand said the package may do the trick with the EU regulator.

“This can create a fourth network player. It will probably deliver what the Commission would like to have,” he said.

The Commission, which will decide on the deal by Sept. 8, declined to comment. Hutchison said both companies were actively engaging with the regulator. Third parties have until June 15 to provide feedback on the concessions.

Telecoms experts said the key issue was finding a rival with the financial resources and convince the Commission that it can compete effectively.

Swisscom’s Italian broadband unit Fastweb is one of those eyeing the offer, a person familiar with the matter told Reuters earlier this week. (Reporting by Foo Yun Chee, editing by David Evans)

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