Telecom Italia is on course to approving a share conversion worth up to €570m that would dilute the shareholding built up by Vivendi and the call options of its compatriot NJJ Holdings.
Telecom Italia (BIT:TIT) has proposed a conversion of savings shares into ordinary stock to simply the company’s capital structure, increase the free float and boost network investments.
The six million share transaction, if approved at a shareholder meeting on 17 December, could raise up to €570m (US$618m) assuming both the mandatory and voluntary portions went ahead, a spokesperson confirmed.
Due to take place during the first two months of 2016, the conversion will occur before the distribution of 2015 dividends, CEO Marco Patuano said on the incumbent’s Q3 conference call.
“Equity valuation is a priority for Telecom Italia, as shown by its past performance and today’s share conversion,” the company stated in its Q3 results announcement.
Not mentioned in the operator’s statement was the fact that the move would also dilute the stakes of Vivendi (EPA:VIV) from the current 20% to less than 14%, according to Reuters.
Vivendi, whose CEO Arnaud de Puyfontaine has said the company does not expect to breach the 24.9% threshold, today told journalists that it would not oppose the conversion.
The conversion would also reduce the eventual shareholding of Franco-Israeli telecoms investor Xavier Niel, who has acquired call options translating to a future 15% stake.
On the call Patuano said the company had not discussed the conversion with the French investors.
Brazil, Metroweb developments
Patuano largely sidestepped questions on developments at TIM Brasil, which is the subject of a potential merger with Oi executed by Russia’s Letter One, saying that his company had not received a “formal offer.”
If there were to be such a formal offer, the board would consider it, he said: “We are open to good offers.”
“We have always said we will consider all options, but any offer for TIM Brasil must be adequate.”
In its results release, Telecom Italia noted that the Brazilian macroeconomic situation had had a negative impact on company wide revenue, which fell 5.1% from the same quarter last year to €4.8bn, and 3.9% to €14.9bn for the same nine-month period last year. Net debt now stands at €26.8bn.
Describing new attempts at a takeover of Metroweb as a “non-event,” Patuano said that Telecom Italia would go ahead with its high-speed broadband deployment with or without the Milan-based dark fibre provider.
Further to the fibre deployment, he added that he was awaiting indications from the government as to what part of the €12bn national broadband plan would correspond to Telecom Italia. Prime Minister Matteo Renzi in August said the government had so far earmarked €2.2bn towards the plan, which would comprise €7bn of state money and €5bn of funds from private sources.