Telecom Italia, Italy’s largest mobile operator, is reportedly putting together a plan to acquire its smaller rival, 3 Italia. According to a report published in Italian newspaper, Il Corriere della Sera, the firm has appointed Goldman Sachs and Bank of America Merrill Lynch to work on a deal. Neither Telecom Italia nor 3 Italia – which is owned by Hong Kong-based Hutchison Whampoa – were prepared to comment on the story. The newspaper valued 3 Italia at around EUR4.3 billion. In 2010, the unit earned EUR96 million (EBITDA) on revenues of EUR1.7 billion. It is not the first time that a tie-up between the two operators has been the subject of speculation; a mooted deal in 2008 reportedly broke down after the two sides failed to agree a price. 

According to Reuters, Hutchison’s telecoms business, 3 Group, broke even in the second-half of 2010 after reporting losses for a decade. The unit is expected to contribute to the conglomerate’s profit beginning this year. Telecom Italia’s mobile arm, TIM, is Italy’s largest mobile operator on an estimated 31.2 million connections at end-Q2, according to Wireless Intelligence. 3 Italia is fourth on 9.1 million, behind Vodafone (30.2 million) and WIND (20.5 million).