Telecoms firms Iliad Group and CK Hutchison are considering a potential tie up in Italy, according to a Reuters report.

Reuters notes that the two companies could merge their respective Italian units, Iliad Italia and Wind Tre, in a move that would slim the market down to three providers.

Three sources told Reuters that CK Hutchison and Iliad are studying the feasibility of a tie-up.

At present, CK Hutchison's Wind Tre is the third-largest telco in Italy with 24 percent market share, while Xavier Niel's Iliad Italia is fourth, with an 11 percent share.

It's thought that Iliad's Italian unit could be worth €3 billion ($3.5bn).

Iliad only entered the market in 2018 and is a relative newcomer. The carrier's proposition was that of a low-cost operator.

The company launched mobile services after acquiring spectrum given up by Wind Tre following the merger of Three Italy and Wind.

Meanwhile, the Wind Tre operation is the result of a history of mobile mergers. Italian mobile operator Andala was launched in 1999 and then acquired by what was then Hutchison Whampoa and renamed H3G/Three Italy in 2000. Meanwhile, Wind was established in late 1997 by Enel, France Télécom (now Orange), and Deutsche Telekom, and was sold in 2005 to Weather Investments and then Veon in 2011. CK Hutchison then acquired part of Wind in 2016 and renamed it Wind Tre, before acquiring the entire company in 2018.

It was reported earlier this year that Iliad was also pursuing a tie-up with another Italian telco, Telecom Italia (TIM).

At present, the carrier serves more than 11 million customers in the country, but has repeatedly called for consolidation in Italy, failing in its efforts to acquire Vodafone last year, which opted to sell its Italian unit to Swisscom instead.