Telecom Italia is still assessing the “feasibility” of a tie-up with Hutchison Whampoa as it aims to complete its evaluation of a potential spinoff of its fixed-line network by 23 May.
Speaking on a conference call with analysts and media today, TI…
Telecom Italia is still assessing the “feasibility” of a tie-up with Hutchison Whampoa as it aims to complete its evaluation of a potential spinoff of its fixed-line network by 23 May.
Speaking on a conference call with analysts and media today, TI chairman and CEO France Bernabe said the telco is continuing its “in-depth analysis” of a possible integration with Hong Kong-based Hutchison’s mobile unit 3 Italia.
While he said a strict confidentiality agreement prevents the company from disclosing details, he noted that such deals are expected to generate considerable commercial synergies.
During a later Q&A session, Bernabe pointed out that a potential deal with Hutchison would be “complex”, noting that there are “antitrust complications and a number of other hurdles”.
“We are in the process of understanding whether it is feasible or not,” he said.
The Italian incumbent issued a statement after a board of directors meeting yesterday saying an “in-depth examination of the potential transaction with Hutchison Whampoa” had been authorised.
The company said the internal committee tasked with conducting a preliminary study of the viability of such a deal has determined that there are “no impediments” to commencing talks with Hutchison. As such, the committee, advised by Credit Suisse, suggested management be mandated to “verify the existence of realistic negotiation margins” over the value of the two companies. The committee recommended the analysis be completed within 30 days.
A separate committee of independent directors advised by Greenhill agreed with the board’s recommendation to deepen the analysis, according to the statement.
TI to retain control of fixed-line network
Speaking about TI’s potential network spinoff on today’s conference call, Bernabe said that any deal will see the telco retain control of the asset.
“[W]e will be in any case maintaining majority of the network,” he said.
In its statement yesterday, TI said the examination of management’s analysis of the potential spinoff will be completed during a special board meeting set for 23 May.
During today’s conference call, Bernabe stressed that a potential network spinoff deal would require major regulatory changes.
He noted that, if the board decides to approve such a deal, it will take “a long time to get implemented”.
“It’s not simply an organisational decision. It would be a transformative deal for the Italian market,” he said.
Bernabe said TI would discuss any such deal with the government, regulators and other stakeholders.
Asked whether a spinoff could happen this year, he said it is too early to say, adding that, following discussions with stakeholders, “we will accelerate with maximum possible speed the implementation of the process”.
