CK HUTCHISON Holdings has been studying the possibility of combining its Italian mobile operations with a local competitor, people familiar with the matter said, as dealmaking accelerates in the highly competitive market.

The company has held exploratory talks about a potential merger of its Wind Tre unit with either Swisscom’s FastWeb business or the local operations of billionaire Xavier Niel’s Iliad, the people said.

The discussions are at a preliminary stage and there’s no guarantee CK Hutchison will decide to pursue a transaction, the people said, asking not to be identified because the deliberations are private.

Iliad on Monday (Dec 18) went public with a 10.5-billion euro (S$15.8 billion) proposal to take over Vodafone Group’s local unit, mounting competition to Fastweb, which was considering its own offer. The companies are weighing combinations to cope with extreme pricing pressure in Italy, where five powerful mobile operators and four strong competitors offering broadband service have driven up carriers’ competition for users.

Representatives for CK Hutchison, Swisscom and Iliad declined to comment.

Wind Tre has a narrow lead in mobile market share in Italy, just ahead of Telecom Italia and Vodafone, according to figures from June compiled by Enders Analysis. In fixed broadband, Telecom Italia is the dominant player, with Wind Tre, Vodafone and FastWeb splitting the remaining customers roughly equally.

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A combination of Wind Tre and Iliad’s local arm could face heavy scrutiny from antitrust regulators. It was Iliad’s entrance in the Italian telecommunications industry in 2018 that helped shake up the market, injecting fresh competition around the same time that CK Hutchison merged its Italian unit with the local operations of VimpelCom to form Wind Tre. BLOOMBERG