State-owned towerco Rai Way would still be open to a merger with Mediaset-controlled rival EI Towers to create a national infrastructure champion, local media reported.
In an interview with Corriere della Sera, Camillo Rossotto, president of…
State-owned towerco Rai Way would still be open to a merger with Mediaset-controlled rival EI Towers to create a national infrastructure champion, local media reported.
In an interview with Corriere della Sera, Camillo Rossotto, president of state-controlled broadcaster Rai, which holds 65.07% of the listed operator, said that a merger with other players would add value to the company, creating synergies through cost and resource optimization.
Rossotto added that a deal with EI Towers, which is 40% owned by former Prime Minister Silvio Berlusconi’s Elettronica Industriale, should be based on a common industrial project and that the new entity could also involve telecoms operators, hinting at the imminent IPO of Telecom Italia’s tower unit Inwit, in which the telco will retain a minimum 60% stake.
However, he warned that the state should still hold a majority interest in the newco, as antitrust regulators had earlier pointed out.
In April, EI Towers dropped plans to acquire Rai Way amid political opposition to the deal.
The company, which had filed an offer for a 66.67% stake in its rival in February, had to abandon its project to create a national network infrastructure player. This is despite having reduced the minimum stake threshold for its bid from 66.67% to 40% to secure regulatory approval, having met opposition from the government, regulators and Rai.
Analysts’ mixed reactions
Analysts expressed mixed feelings about Rai’s president remarks.
“The interview confirms our view that consolidation in the Italian broadcasting tower sector is only a matter of time, given its strong industrial rationale,” Antonella Frongillo, research analyst at Banca IMI said.
However, according to Emanuele Isella, an analyst at Fidentiis Equities, the idea of a merger between Rai Way, EI Towers and Inwit is very unlikely.
In his view, the most likely scenario is that EI Towers places an offer for Inwit, which is valued at around €2.4bn according to TI’s advisers, in a bid to diversify its business in the mobile segment, which currently accounts for 10% of its revenues.
EI Towers would only be able to borrow up to €1bn for a potential deal, the analyst said, and would therefore need to fund the acquisition with a capital increase.
Abertis-owned Cellnex Telecom, which went public earlier this month after acquiring Wind Telecomunicazioni’s 7,377 towers, could also be a potential suitor for Inwit, as a combination between the two could create “greater synergies”.
US investors eye Italian tower sector
A source familiar with the industry told SatelliteFinance that a number of US investment funds are closely monitoring the Italian tower sector, as they believe it holds strong potential. They would be interested in acquiring a stake in EI Towers, Rai Way, or possibly Inwit, once the IPO process is completed.
However, the source said, deal talks could be hampered by the government’s protectionist attitude towards foreign investment, particularly in sensitive areas such as telecommunications.
In 2001, the then Berlusconi-led government shot down an attempt by US telco Crown Castleto buy 49% of Rai Way for US$380m.
