The talks between Telecom Italia and Hutchison Whampoa about a merger of their Italian interests are over, ending the possibility of consolidation for the moment in one of Europe’s largest mobile markets.
A statement from Telecom Italia said: “currently there are no elements to start negotiations with Hutchison Whampoa” about a combination with 3 Italia.
For its part, Hutchison said the two companies had had “very preliminary exploratory contacts”. On the basis of these negotiations, 3 Italia has decided that further discussions are “not warranted because it would not be in a position to obtain approval from its parent company for a transaction at this stage”.
Bloomberg, having spoken with people familiar with the situation, said talks failed because the two sides could not agree on valuation.
However, analysts also pointed to regulatory and political barriers in the way of any merger.
Concern about Italian-owned telecoms assets falling under foreign control have played a role in the saga. Telecom Italia’s long-running aim of spinning off its fixed-network assets was given impetus because it would remove them from any Hutchison-backed entity. The plans for that spin-off are going ahead.
There had been signs in recent days that talks between the two companies were struggling, with reports that Hutchison was losing patience.
However, the Hong Kong-based company is unlikely to give up on its dealmaking. It has just bought Telefonica’s Irish operation, O2 Ireland, and last year acquired Orange Austria. Previously, Hutchison was linked to Wind, another Italian operator. A revival of that particular deal would renew the possibility of consolidation in the country’s mobile market.