Stephane Richard, CEO of French incumbent Orange, has expressed an interest in a tie-up with Telecom Italia (TI), according to a report by French daily Journal du Dimanche.
He noted that there were “exchanges of views” between the two parties, but…
Stephane Richard, CEO of French incumbent Orange, has expressed an interest in a tie-up with Telecom Italia (TI), according to a report by French daily Journal du Dimanche.
He noted that there were “exchanges of views” between the two parties, but no negotiations were underway, adding that a deal with TI would be a great opportunity for European consolidation, the article suggested.
Telecom Italia denied the report, while Orange confirmed that there have been “informal exchanges of views between the top management of the two companies on the theme of potential European sector consolidation”.
The Paris-based telco has recently agreed to sell its UK mobile unit EE, a 50:50 joint venture with Deutsche Telekom, to British incumbent BT for £12.5bn (US$19bn). It is also awaiting regulatory approval for its planned €3.4bn (US$3.8bn) takeover of Spanish fixed-line operator Jazztel.
In recent weeks, press rumours emerged that a number of private equity funds were examining TI’s shareholding structure, although they had not yet entertained formal talks with the Rome-based operator.
According to local reports, Apax Partners, Bain Capital, Providence Equity, Blackstone and KKR are particularly interested in TI’s Brazilian footprint via carrier number two TIM Brasil, which is reviewing a potential merger with smaller rival Oi.
As part of its recently-announced 2015-2017 strategic plan, the highly-leveraged incumbent aims to reduce its debt burden− which stands at €26.65bn− and invest €10bn in Italy and €4bn in Brazil over the next three years.
“The aim of this acceleration of investments is to create the foundations for growth in turnover based increasingly on the spread of innovative services with digital content,” the company said.
TI expects the new plan will also result in savings of about €1bn over the three years due to cost efficiencies.
The telco reported consolidated revenues for 2014 of €21.57bn, down 5.4% year-on-year. EBITDA totalled €8.7bn, down 6.8% on the 2013 result. The new strategic plan will see TI aim to reduce its current net debt to EBITDA ratio of 3x to 2.5x by the end of 2017.
