Telecom Italia is reportedly considering the disposal of its 67% stake in mobile operator TIM Brasil as it looks to cut its €29bn (US$39.2bn) debt pile.
The Italian incumbent, which had its debt downgraded to junk by Moody’s earlier this week, would…
Telecom Italia is reportedly considering the disposal of its 67% stake in mobile operator TIM Brasil as it looks to cut its €29bn (US$39.2bn) debt pile.
The Italian incumbent, which had its debt downgraded to junk by Moody’s earlier this week, would look to raise a minimum of €9bn (US$12bn) from a disposal and could achieve €10bn (US$13.5bn), according to a person with direct knowledge of the matter cited by Bloomberg.
TIM has a market capitalisation of €9.4bn (US$12.75bn), which values Telecom Italia’s stake at €6.3bn (US$8.5bn)
Last night Telecom Italia released a statement saying that “there is no formal or informal process ongoing for the disposal of its interest” in the Brazilian company.
Telecom Italia is yet to mandate banks to look at options for TIM and the process of deciding the future of the Brazilian player is at an early stage, the report said.
Last week Telecom Italia named Marco Patuano as its interim CEO following Franco Bernabe’s resignation, paving the way for the development of a new strategy.
Rumours of Bernabe’s resignation started in late September after Telefonica agreed a deal with other investors in Telco, which owns 22.4% of Telecom Italia, to increase its stake in the holding company.
Bernabe had reportedly advocated a capital increase of up to €5bn to avoid a credit downgrade to junk status. But reports suggested that the Spanish telco could opt for an assets sale instead, now that it has a tighter grip on two Brazilian rival players – TIM Brasil and Vivo.
Paulo Bernardo, Brazil’s communications minister, has already been quoted as saying that if Telefonica gained control of two operators in the country that would be considered a significant concentration and a very negative development for competition.
In case of a disposal, TIM could either be sold as a whole or broken up and split between Claro, Oi and Vivo, according to reports. But a break-up in this fashion is complicated by Oi’s recently agreed merger with Portugal Telecom, which will not close until Q1 2014 at the earliest. Splitting up TIM would also pique the regulator’s interest as it would concentrate the market, from four operators to three.
Instead, a new player could also swoop in and acquire TIM but it remains unclear which company might be interested. Earlier this week Vodafone, previously touted by some as a possible bidder, was reported to not be interested.
