France's Iliad SA has agreed to acquire the remedy package put together by CK Hutchison Holdings Ltd. and VimpelCom Ltd. to address regulatory concerns over the merger of their Italian businesses.

Buying the assets would allow Iliad—controlled by French billionaire Xavier Niel—to create a fourth mobile network in the country with nationwide coverage.

"The agreement is a unique opportunity for the Iliad Group to enter the Italian telecoms market," Iliad said, adding that its plan is "to capitalize on the experience it has acquired in France with the successful launch of a fourth mobile network operator in 2012."

Iliad, which beat a rival bid from another Italian operator, Fastweb, owned by Swisscom, said it would spend €450 million on frequencies, but didn't provide an overall value for the deal, which also includes infrastructure assets.

CK Hutchison and VimpelCom last year agreed to form a new equally owned joint venture that would house their two Italian businesses and create a mobile operator in the country with more than 31 million subscribers.

But the European Commission, the bloc's antitrust authority, said it had concerns the deal could lead to increased prices and reduced choice for customers in Italy and opened a formal probe into the merger in March.

Margrethe Vestager, the European Union's antitrust chief, has taken a tough line against telecom deals in the region, particularly in cases where deals reduce the number of mobile-telecom operators in a given country.

Telecommunications executives have long argued that mergers are necessary to reduce competition and boost investment at a time when consumers are using more data as they watch more videos on smartphones.

Brussels has in recent months blocked other telecommunications mergers after voicing similar concerns, including CK Hutchison Holdings Ltd.'s planned multibillion-dollar acquisition of British mobile operator O2.

In recent years, Italy's telecom sector has been one of the hardest hit in Europe, suffering from harsh competition and plummeting prices. Last year, Italian telecommunication companies saw their revenue shrink 1.5% compared with 2014, according to the country's regulator Agcom. Total revenue from the mobile segment was also negative, down 0.6%, Agcom said.

Still, there are signs of a trend reversal in the mobile-telecom segment, raising hopes of a recovery for some Italian players, which may now be put at risk by Iliad's mobile deal in Italy, analysts say.

Iliad entered the French market with cutthroat prices for mobile-phone subscriptions for as little as €2—less than $3—a month in 2012, forcing competitors to also cut their prices, and it grabbed around 17% market share in four years.

Barclays analyst Daniel Morris said Iliad's entry into the market would be a "negative development" for competitors including Vodafone Group PLC and Telecom Italia.

Wind Telecomunicazioni SpA and H3G increased their market share in the mobile sector respectively by 0.2% and 0.6% last year.

As a result, Wind's market share in 2015 grew to 20.7%, while H3G reached 12%. Telecom Italia SpA saw its mobile market share falling slightly to 32.2% last year, while Vodafone's Italian branch lost a 0.9% to reach 31%.

People familiar with the matter have long said Iliad would eventually want to go for another transformative deal, partly to put its management team to work on another large-scale project, after barnstorming France's mobile arena.

Iliad had looked into whether it could use the remedies from CK Hutchison's planned $14 billion takeover of Telefonica SA's British cellphone operator O2 to enter the U.K. market, people familiar with the matter said, but the deal was torpedoed by the European Commission in May. Iliad also made a failed attempt to acquire a controlling stake in T-Mobile US Inc. in 2014.

Mr. Niel, who purchased options to buy a more than 10% stake in Telecom Italia last year, said he now owns a stake valued at less than €25 million in the former state monopoly, which he said he would sell in the next few weeks.

Write to Nick Kostov at Nick.Kostov@wsj.com and Manuela Mesco at manuela.mesco@wsj.com

(END) Dow Jones Newswires

July 06, 2016 03:35 ET (07:35 GMT)