"Hutchison Whampoa has outmanoeuvred Deutsche Telekom to win a strategic foothold in the Italian mobile phone market after a battle to team up for third generation licence auctions.
"The Hong Kong-based conglomerate is poised to strike a partnership with Tiscali, the growing Italian communications and internet group, to bid for one of the new licences to be auctioned later this year by the Italian government.
"Barring any last minute upsets, the deal would represent another blow for Deutsche Telekom's ambitions to break into Italy, which is Europe's largest mobile phone market with more than 35m subscribers.
"The German group was recently forced out of Wind, its Italian joint venture, after last year's unsuccessful bid for Telecom Italia upset partners France Telecom and Enel, the Italian electricity utility.
"Since then, Deutsche Telekom and Hutchison have been negotiating for the acquisition of a significant stake in Andala, the consortium led by Tiscali that is planning to bid for one of Italy's five new generation UMTS mobile telephone licences. People close to the transaction said on Thursday that Hutchison was set to win. The Italian consortium is due to announce its new international partner before a shareholders' meeting on Monday due to approve a capital increase.
"The deal is expected to involve not only the Hong Kong-based group but its partnership with KPN of Holland and Japan's NTT DoCoMo, created to bid for new generation mobile telephone licences in Europe. Hutchison's financial war chest, coupled with its links with the Japanese and Dutch companies, are understood to have helped the Hong Kong group gain the edge.