Telecom Italia (TI) is reportedly considering selling a 30% stake in a new company that would own its fixed-line network to state lender Cassa Depositi e Prestiti (CDP), which may be permitted to increase its shareholding over time.
The Italian…
Telecom Italia (TI) is reportedly considering selling a 30% stake in a new company that would own its fixed-line network to state lender Cassa Depositi e Prestiti (CDP), which may be permitted to increase its shareholding over time.
The Italian incumbent may transfer up to €10bn (US$13bn) in debt to the new company, in which CDP may invest an initial €2bn, Bloomberg reported, citing two unidentified sources familiar with the matter. The sources were cited as saying talks are still at a preliminary stage.
An IPO of the new business could also be considered at some point, the report cited another source as saying.
Earlier this month, TI announced that its board had mandated the management team to examine “the feasibility of structurally separating the fixed-line network”. The board is set to meet on 6 May to discuss the matter further.
Milan-based TI has been considering spinning off the network, said to be worth at least €13bn, since last year. In December, the board resolved to continue talks with CDP about the potential deal.
At the time of writing, TI’s ordinary shares on the Italian Stock Exchange were up 6.93% to €0.6175 each.
The company is also in talks with Hong Kong’s Hutchison Whampoa, owner of 3 Italia, about a potential tie-up.
Yesterday, Reuters cited an unidentified source as saying that Hutchison would not oppose TI spinning off its fixed-line network as it is only interested in the company’s mobile business.
The Bloomberg report cited its sources as saying that activating a network spinoff plan ahead of a deal with Hutchison could shorten the regulatory review of the latter. However, an Italian M&A lawyer recently told TelecomFinance, a TI-Hutchison deal would likely still face legal challenges.
Meanwhile, Italian newspaper Corriere delle Comunicazioni recently quoted Giovanni Pitruzzella, chairman of Italy’s competition regulator, as saying the authority approves the network spin-off in principle.
The company is working to cut net debt, which stood at €28.3bn at the end of 2012, to €27bn by the end of the year.
