Telecom Italia reportedly does not want Hutchison Whampoa’s stake in their discussed combined entity to exceed 10%.
While the Italian incumbent is still open to negotiations, it is unlikely to accept a deal that would give Hutchison, owner of…
Telecom Italia reportedly does not want Hutchison Whampoa’s stake in their discussed combined entity to exceed 10%.
While the Italian incumbent is still open to negotiations, it is unlikely to accept a deal that would give Hutchison, owner of Italy’s fourth-largest mobile operator 3 Italia, its target 29.9% shareholding, Bloomberg reported, citing an unidentified source familiar with the matter.
Telecom Italia’s board of directors established a special committee, headed by chairman and CEO France Bernabe, on 11 April to “verify within a short timeframe” the company’s interest in going ahead with a deal that would see Hutchison become the leading shareholder in a combined business. The new business could come about via contribution in kind or merger, the Milan-based telco has said. Representatives of Telco, TI’s largest shareholder at present with a 22.4% stake, are also on the special committee.
Bernabe was quoted as saying at TI’s AGM on Wednesday (17 April) that the potential merger, if carried out at ratios representing the actual contributions of the two companies, would present industrial synergies involving considerable cost savings. The combined business would also benefit from the companies’ complementary customer bases, he reportedly said.
Network spinoff still a factor
Simultaneously, TI management are investigating the feasibility of “structurally separating” the company’s fixed-line network, said to be worth at least €13bn.
The Bloomberg report cited an unnamed person as saying the telco plans to present the board at an 8 May meeting with a spinoff proposal that would ultimately see state lender Cassa e Depositi e Prestiti (CDP) acquire a stake in the network. The spinoff is considered a prerequisite to any deal with Hutchison, the report cited the source as saying.
Meanwhile, Italian newspaper Corriere delle Comunicazioni recently quoted Giovanni Pitruzzella, chairman of Italy’s competition regulator, as saying the authority approves the network spin-off in principle. Pitruzella reportedly noted that the regulator has always supported efforts to ensure net neutrality, adding that TI’s network spinoff could represent a competition victory.
