Telecom Italia CEO Marco Patuano has told the Italian Parliament that his company can reap €3bn in 2016, making a dent in its €26.8bn net debt. The measures however will depend on outside forces including the equity market, Argentine courts, regulators and new government, and two billionaire French investors whose strategic intentions remain a mystery. Not mentioned in the hearing was TIM Brasil, the merger of which could now be impacted by an expected update to Brazil’s telecom law.
Telecom Italia (BIT:TIT) will be able to raise more than €3bn (US$3.2bnbn) next year, CEO Marco Patuano has said.
As of 30 September, the Italian incumbent had net debt of €26.8bn (US$28.6bn), while its market cap is €22.8bn (US$24.2bn).
Speaking at a hearing before the Italian senate, Patuano said measures to achieve this included the company’s proposed savings share conversion, its €1.3bn (US$1.4bn) mandatory convertible bond due November 2016, listing of more shares in tower spin-off Inwit and the sale of Telecom Argentina.
Argentine leadership change could reverse opposition to Telecom Argentina, Nextel deals
Patuano said he was confident that the Telecom Argentina sale would complete, despite regulator AFTIC nixing it on the basis that buyer Fintech was “not in a position to operate and take control” of the local incumbent since it has “demonstrated neither experience nor expertise”.
In related news, a judge in Argentina’s Federal Administrative Court has reportedly ordered an injunction on AFTIC’s blocking of another telecoms deal, NII Holdings’ sale of Nextel Argentina to media group Clarín. The move pushes back the review of that case by six months.
This week’s presidential election, won by Buenos Aires mayor Mauricio Macri, marked the end of the country’s Peronist leadership by Nestor Kirchner and his wife Cristina Fernández de Kirchner. The outgoing president in particular had opposed Clarín and been seen as the force behind AFTIC’s recent decisions.
Shareholder questions continue
Patuano confirmed that the proposal to convert savings shares into ordinary stock – due to be put to a shareholder vote on 17 December – would dilute the shareholding of Vivendi from 20.1% to 13.7%, and the future shareholding of Xavier Niel’s NJJ Capital from 15.% to between 10% and 10.2%.
Telecom Italia chairman Giuseppe Recchi, also speaking at the hearing, denied that Vivendi’s “significant” holding meant it exercised a “dominant influence”.
Patuano told Reuters that the board would consider Vivendi’s request for four new board seats tomorrow, having postponed a meeting previously set for 20 November.
Last week, Italian and foreign funds said the request raised governance concerns, since Vivendi would hold 23% of the enlarged board’s 17 seats but own only 13.7% of shares following the dilution.
There are also ongoing concerns that Vivendi chairman Vincent Bolloré may be pursuing activist investment objectives rather than the stated goal of securing an Italian distribution platform for the French company’s content.
Utility involvement in high-speed broadband deployment
Patuano furthermore addressed ongoing talks with Italian utility Enel, which has offered its existing infrastructure to host fibre optic cables as part of the country’s high-speed broadband plan.
He said Telecom Italia was ready to cooperate with Enel and rent infrastructure in order to boost last mile fibre deployment, but that it would not need to do so as a shareholder, according to comments cited by Reuters.
Last week, Enel announced it would set up a new company aimed at laying fibre cable, as part of plans to diversify away from weakening Southern European and South American energy markets, according to Il Sole 24 Ore.
New Brazilian telecom rules could pave way for TIM merger
Finally, plans by Brazil’s government to revamp the country’s telecoms rules could impact Telecom Italia’s willingness to pursue a merger between its local subsidiary TIM Brasil and rival Oi.
Communications Minister Andre Figueiredo Lima yesterday launched a public consultation to seek feedback on a new bill, which would go to Congress next year.
Patuano has said he would consider a merger with Oi, as proposed by Russian investor LetterOne, on the basis that Brazil updates its regulation on consolidation and network investment.
