Any tie-up between Telecom Italia (TI) and Hutchison Whampoa’s mobile unit 3 Italia would be subject to the latter becoming the leading shareholder in the merged company.
Milan-based TI issued a statement after its board of directors’ meeting…
Any tie-up between Telecom Italia (TI) and Hutchison Whampoa’s mobile unit 3 Italia would be subject to the latter becoming the leading shareholder in the merged company.
Milan-based TI issued a statement after its board of directors’ meeting yesterday saying Hong Kong-based Hutchison has stipulated that the deal would be contingent upon it acquiring a stake in the Italian incumbent that would make it the major shareholder of the combined entity.
The TI board has established a special committee, chaired by company chairman and CEO Franco Bernabe, to determine whether the company is interested in pursuing such a deal.
The other members of the committee are Telefonica’s Julio Linares, Intesa Sanpaolo’s Elio Cosimo Catania, Assicurazioni Generali’s Gabriele Galateri and independent director Luigi Zingales.
Telefonica, Intesa Sanpaolo and Assicurazioni Generali form part of Telco – TI’s largest shareholder with a 22.4% stake.
An Italian newspaper report published prior to yesterday’s meeting said Hutchison was willing to pay for a stake in TI with shares in 3 Italia, worth an estimated €1.5bn, and cash. The cash component of the deal would value the incumbent’s shares at €1.20 each, the report stated.
There has been considerable media speculation that the possible deal could break up Telco. Bloomberg cited two unidentified sources as saying Telefonica is prepared to sell its indirect stake in TI as the telcos have failed to generate synergies. The Spanish company has declined to comment.
Mediobanca is open to selling its stake in TI, but only to an investor it believes will lead the telco in the right direction.
Last year, Telco rejected an unsolicited bid from Egyptian tycoon Naguib Sawiris to acquire a €2bn stake in the company.
3 Italia is Italy’s fourth largest mobile operator with about 9.5 million customers at the end of 2012. The operator reported revenues for the year of €2bn and EBITDA of €264m.
Network spinoff still a possibility
In its statement yesterday, TI also said its board has mandated management to examine the “feasibility of structurally separating its fixed-line network”.
TI has been considering spinning off the network, said to be worth about €15bn, since last year. In December, the board resolved to continue talks with state-controlled lender Cassa Depositi e Prestiti (CDP) about the potential deal.
TI is working to cut net debt, which stood at €28.3bn at the end of 2012, to €27bn by the end of the year.
