HEARD ON THE STREET: many obstacles to Wind-third, but you will ‘- BBC

18:42 ROME (Dow Jones) – The compelling reasons that are leading more and more ‘neighbors in Italy Hutchison Whampoa and VimpelCom could prevail on the differences between the two companies’, again in merger talks between their asset Italian, Wind and 3 Italy. An operation that would create a mobile operator that would control about a third of the market with 32 million customers, surpassing so ‘both Vodafone and Telecom Italy. The number one of Hutchison, Li Ka-shing, needs this to grow in Italy, since Italy is the third most ‘small operator in the Italian market as the number of customers. A merger with Wind could allow greater pricing power and opportunity ‘to cut costs further. RBC Capital Markets estimated that the cost cutting could reach 485 million per year, of which 10% in operating costs and 15% in investment. Hutchison and ‘nevertheless still grappling with its attempted acquisition of English O2 to 10.25 billion pounds and could find a whole take the mountain of debt of Wind. Even after a series of refinancing operations and the sale of 7,000 towers, the debt of Wind and ‘in fact still among the most’ highest in the European telecoms sector. Structuring the transaction as a joint venture could however allow Hutchison to strengthen its presence in Italy without excessively increasing its indebtedness. Wind and even ‘struggling with competition more and more’ fierce in the Italian market. In the first quarter Ebitda of Vimpelcom in Italy and ‘fell by 5%, while expenses rose by 26% y / y. However, wind still accounts for 30% of total revenues of Vimpelcom, which could then benefit from a joint venture with Hutchison to maintain its presence in Italy. Wind should be to control the joint venture, saw its Ebitda and ‘about 7 times greater than that of 3 Italy, but because of its high debt, which has always been an obstacle in previous negotiations, Vimpelcom may decide to have a minority share the JV in exchange for other concessions, such as a greater managerial control. There are in fact many obstacles to overcome because ‘this marriage to happen, but because of the difficulties’ that both groups are facing, could be easily overcome. liv (end) AFX NEWS 1418: 41 May 2015