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Tiscali, Hutchison link up?
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August 4, 2000: 11:50 a.m. ET
Reports: Italian, Hong Kong firms allies in telecom bidding; Web deal mulled
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LONDON (CNNfn) - Italian communications company Tiscali S.p.A. reportedly has lined up with Hong Kong-based telecom and real estate conglomerate Hutchison Whampoa to bid for a next-generation mobile phone license in Italy - apparently leaving Germany's Deutsche Telekom AG on its own in the bidding.
Hutchison and Deutsche Telekom have been jockeying to buy a 50 percent stake in the Tiscali-led Andala consortium, which is bidding for one of the five Universal Mobile Telecommunications Standard, or UMTS, phone licenses up for sale in Italy, the Financial Times reported Friday.
The newspaper, citing people close to the negotiations, said Hutchison has outmaneuvered the German company. Spokespeople for Deutsche Telekom and Tiscali declined comment to CNNfn.com and Hutchison didn't return calls seeking comment.
Hans Ehnert, a Deutsche Telekom spokesman, said only: "Italy is an interesting market for Deutsche Telekom."
The alliance, which Andala reportedly will announce Monday, would build on Hutchison's recent accord with Japan's NTT DoCoMo and Netherlands-based KPN to bid for next-generation mobile-phone licenses in Europe. Such a deal between Andala and Hutchison could represent the latest blow for Deutsche Telekom to its efforts to enter the Italian telecommunications market.
Deutsche Telekom, Germany's richest company by market value, was trumped by Italy's Olivetti in its effort to buy former Italian phone monopoly Telecom Italia last year. That abortive buyout served only to rankle Deutsche Telekom's estranged partner, France Telecom, which subsequently forced the German behemoth out of its Wind mobile phone joint venture in Italy with the electric utility Enel.
Italy plans to offer five next-generation licenses by way of a two-stage process -- a qualifying "beauty contest" stage to determine the quality of the offer, then a second, competitive stage at which bidders will be able to increase their offers.
Countries across Western Europe, most recently Germany, have been auctioning UMTS licenses, which would allow the companies to deliver technology such as video conferencing or high-speed Internet access through cell phones.
The recently completed U.K. auction netted about $35 billion for the British government.
Renato Soru, founder and chief executive officer of Tiscali, told CNNfn recently that prices in the U.K. auction is making it limit its participation -- prompting its search for a partner. "We will maintain a strategic stake in the company," he said however. Tiscali currently owns 58 percent of Andala.
Italy has the highest percentage of mobile phone use among Europe's largest economies, with roughly 57 percent of the population using wireless service, according to 1999 data from IDC Corp. Britain is next among big economies at about 46 percent, while Germany's mobile phone penetration rate is about 33 percent, according to the data.
Italy's current mobile phone operators are Telecom Italia Mobile, which is owned by Telecom Italia; Omnitel, owned by Britain's Vodafone; Wind; and the main shareholders in Blu are Italian motorways company Autostrade and British Telecom.
Tiscali, World Online in talks?
Meanwhile, the Reuters news agency reported Friday that Tiscali, Italy's third-largest Internet service provider, is considering a merger with Netherlands-based ISP World Online.
If completed, such a deal would create Europe's second-largest online service provider, surpassing AOL Europe, industry sources told the news agency. The combined company would approach in size the six million subscribers boasted by Europe's largest ISP, T-Online: the Deutsche Telekom unit which floated in April.
Both firms declined comment. 
--from staff and wire reports
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