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Hutchison Is Buyer of Phone Assets in Italy, Novari Says

Hutchison Whampoa Ltd. (13), Hong Kong billionaire Li Ka-shing’s biggest company, may consider other options to bolster its telecommunications assets in Italy after talks to merge with Telecom Italia SpA (TIT)’s wireless business were put on hold, the head of its local unit said.

The number of wireless carriers in Italy will eventually drop to three from four, said Vincenzo Novari, chief executive officer of Hutchison’s 3 Italia, the country’s smallest operator. The executive said he wouldn’t rule out a potential revival of a deal with Telecom Italia, or with Wind Telecomunicazioni SpA, a unit of VimpelCom Ltd. (VIP)

“In Italy Hutchison Whampoa will be a buyer not a seller,” Novari said in an interview after a meeting with regulators in Rome this week. “Discussions with Telecom Italia have now stopped, but who knows what happens in the fall?”

3 Italia, valued at as much as 1.5 billion euros ($2 billion), said this month it wouldn’t be in a position to win approval from its parent to pursue a combination with Telecom Italia, which would widen the Milan-based carrier’s lead over Vodafone Group Plc (VOD) in Italy. Hutchison was concerned about the shareholder structure of a potential transaction and Telecom Italia’s debt, which may weigh on its own debt rating, Novari said.

Hutchison gained 0.2 percent to HK$87.00 in Hong Kong trading today. Vimpelcom Ltd declined 1.7 percent to close at $10.37 in New York yesterday. Telecom Italia shares rose 0.9 percent to 53.3 cents at 9:48 a.m. in Milan.

ParknShop Sale?

Hutchison, with businesses ranging from retail, ports to telecommunications, is conducting a strategic review of its ParknShop supermarket chain. An exit would free up resources for Hutchison to invest in faster-growing businesses. ParknShop could fetch $3 billion to $4 billion in a sale, according to a person with knowledge of the matter.

The conglomerate, which sells wireless services in Europe under the 3 brand, last month agreed to buy Telefonica SA (TEF)’s Irish division for as much as 850 million euros.

3 Italia had about 10.2 percent of Italy’s more than 90 million wireless customers at the end of the first quarter, according to data compiled by communications regulator Agcom. That compares with 34.4 percent by Telecom Italia, 31.6 percent for Vodafone and Wind’s 23.8 percent.

The Hutchison unit reported 2012 earnings before interest, taxes, depreciation and amortization of 264 million euros on revenue of 1.97 billion euros. Ebitda will probably exceed 250 million euros this year, Novari said.

European Deals

Earlier this week, Telefonica Deutschland Holding AG (O2D) agreed to acquire Royal KPN NV’s German wireless business in a $10.7 billion cash-and-stock transaction to leapfrog Deutsche Telekom AG (DTE) as the country’s largest carrier by customers. The deal, which would cut Germany’s number of operators to three, requires antitrust approval.

“It doesn’t make sense to have so many players in Europe,” Telefonica Chief Operating Officer Jose Maria Alvarez-Pallete said on a conference call with analysts yesterday. “If Europe as a region wants to play scale it needs to consolidate. That consolidation is going to be in the interest of European consumers and therefore it needs to happen.”

To contact the reporter on this story: Daniele Lepido in Milan at dlepido1@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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