Some good news at last
　　CKH’s share price has been battered in the last few months with the Brexitleave vote and the O2 deal disapproved by the EU regulator. However somepositive news now appears on the horizon with Bloomberg reporting that CKHand VimpelCom are looking to expedite the approval of their merger deal inItaly by offering additional concessions （“Hutchison, VimpelCom said to planItaly Disposals to Sway EU”， 30 June 2016）。 Given the high possibility of afourth operator emerging and less complications around infrastructure sharingagreements vs the UK, we think regulatory approval is highly likely and thedeal should underpin the continued growth in the European telecom business.
　　Expect discipline from CKH on the asset disposalsReuters previously suggested （“Hutchison, Vimpelcom ready to divestspectrum”， June 10） that CKH offered to divest spectrum, more than 8,000network sites and a roaming deal. While no detail was provided on theadditional concessions offered, we expect CKH to be disciplined in its assetdisposal negotiations. Furthermore with two rival bidders （in Fastweb andIlliad） we expect a reasonable price being paid for the disposed assets.
　　Timetable may be accelerated
　　The Bloomberg article suggested that the EU regulator will send a statement ofobjections next week. However, a decision by the EU not to send objectionsmay mean that the deal could be approved ahead of the 8 September deadline.
　　This should be welcoming news for the stock which has underperformed thebroader HSI index by 18% over the last 3 months and is now trading on anFY16 PER of 10.5x.
　　FastWeb likely to be the preferred by the operatorsWe expect FastWeb to be the preferred bidder by the operators given itsdisciplined pricing approach vs Illiad which has been known to be aggressiveon pricing in the market that it operated in.