Last checked at 
(Corrects paragraph 3 to create instead of crate)
* Vimpelcom's Wind and Hutchison's 3 Italia to merge
* Brings together No.3 and No.4 players in Italy
* Deal needs regulatory approval
By Danilo Masoni, Leila Abboud and Pamela Barbaglia
MILAN/PARIS, Aug 6 (Reuters) - Vimpelcom andHutchison have agreed to combine their Italian mobileoperations in a long-awaited deal that would cut the number ofplayers in Europe's fourth-largest telecom market to three fromfour.
The 50-50 joint venture, if approved by competitionregulators, would combine Vimpelcom's WIND Telecommunicazioni,Italy's third-largest mobile network operator, withfourth-placed 3 Italia.
It would reduce the Italian market to three players ofroughly the same size, and create a new competitor for TelecomItalia and Vodafone.
The new company said the deal would deliver cost savingsworth more than 5 billion euros ($5.4 billion), most of whichwould come from combining the two mobile networks.
Vimpelcom shares jumped 3 percent at the New York open asinvestors welcomed a deal that should bring hefty synergies andmay calm competition in Italy, where operators are emerging froma two-year price war.
Neither company will have to inject money into the newentity, in contrast to expectations that a capital hike of 2billion euros was on the cards to help reduce debt.
A person close to the deal said the new company was valuedat around 21.8 billion euros, with Wind's contribution beingassets worth 13.9 billion in 2014, while Hutchison had 7.9billion euros. Wind also has high debt.
GOVERNANCE
It remains to be see how the joint ownership will work,especially since Hutchison and Vimpelcom are backed by powerfulbillionaires.
Hutchison Chairman Li Ka-shing and Russian billionaireMikhail Fridman -- whose LetterOne fund holds 47.9 percent ofVimpelcom's voting rights -- have held on-off talks for years ona deal in Italy and came close a few times before scrapping itat the eleventh hour over control.
"This is a true and well-balanced joint venture with Hutchand Vimpelcom sharing equal power," said the person close to thedeal, adding the six-person board would be evenly split.
Maximo Ibarra, chief executive of Wind, will become CEO ofthe new entity. Stefano Invernizzi, finance chief of 3 Italiawill serve as chief financial officer of the combined group, andHutchison will name the first chairman.
The companies expect the deal to close in 12 months, andsaid they would begin discussions towards regulatory approval asearly as September.
As in other mobile deals in Europe, regulators are expectedto demand concessions to protect consumers from higher prices,such as requiring the new company to rent out space on itsnetwork to mobile virtual network operators (MVNOs).
But since European and national regulators have alreadygiven the green light to similar deals in Ireland, Germany andAustria, Italian consolidation is expected to get approval.
Vimpelcom's CEO Jean-Yves Charlier said the agreement withHutchison allowed both parties to walk away from the deal ifregulators demanded concessions that made it unpalatable.
Hutchison has considerable experience dealing with antitrustregulators since it was involved in similar transactions inAustria and Ireland. It is also now in the process of seekingapprovals for acquisitions in Denmark and Britain.
Paul Marsch, a telecoms analyst at Berenberg Bank, said itremained to be seen how European Competition CommissionerMargrethe Vestager would approach the negotiation over remedies.
She put European telecom companies, which have been in afrenzy of dealmaking in the past two years, on notice in June bysaying consolidation could be bad for consumers and innovation.
"We will know pretty soon whether Vestager's tough wordstranslate into tough action," said Marsch.
Hutchison was advised by Goldman Sachs and law firmFreshfields. Vimpelcom was advised by HSBC and MorganStanley, and law firm Allen & Overy.
($1 = 0.9186 euros) (Editing by Jane Merriman and Mark Potter)
