Telecom Italia has decided to decline Egyptian telecoms investor Naguib Sawiris’ offer to invest in the company as it continues to assess options for spinning off its fixed-line network and seeks better offers for its media unit. Following a board…
Telecom Italia has decided to decline Egyptian telecoms investor Naguib Sawiris’ offer to invest in the company as it continues to assess options for spinning off its fixed-line network and seeks better offers for its media unit.
Following a board meeting chaired by CEO Franco Bernabe, Telecom Italia announced it will not proceed further with Sawiris’ proposal to invest in the company via a capital increase.
Sawiris had offered to invest between €3bn and €5bn in the telco. It had been suggested that he would have offered about €0.70 (US$0.90) per share – less than half the book price of €1.50 per share held by Telco, which has a 22.4% stake in the company. Telco shareholders are Mediobanca, Assicurazioni Generali, Telefonica and Intesa Sanpaolo.
Possible network spin-off
The board also decided to continue talks with Cassa Depositi e Prestiti (CDP) about a possible spin-off of TI’s network and an investment by CDP in the asset, which is reported to be worth about €15bn.
Talks with CDP began months ago and Bernabe has previously said a decision on whether to proceed with a spin-off of the network into a new company would be made by year-end. Morgan Stanley, Intesa Sanpaolo, Mediobanca and Barclays are advising on the spin-off.
Telecom Italia did not state whether the board had discussed the possible purchase of Vivendi’s Brazilian telco GVT. Bernabe told media late last month that the company has not taken part in the sales process, although the asset is of interest to the group. TelecomFinance understand that if a new business plan, to be presented next February, alters targets and provides for investments like those needed for GVT, the company will reassess matters.
The deadline for preliminary bids for GVT is reportedly at the end of the year.
At yesterday’s meeting, the board also decided to direct management to negotiate better offers for Telecom Italia Media. Having evaluated the two bids received, the board has asked for “better conditions” in the final binding offers. The two offers are reported to have come from Italian advertising company Cairo Communications and private equity funds Clessidra and Equinix.
Telecom Italia’s net debt at the end of September amounted to €29.97bn. The company has previously said it aims to reduce net debt to €27.5bn (US$35.6bn) by the end of the year.
