Telecom Italia’s media unit has agreed to sell its stake in flagship TV channel La7 to local media company Cairo Communications as part of the telco’s debt cutting and network investment plans.
Telecom Italia Media (TI Media) said its board mandated…
Telecom Italia’s media unit has agreed to sell its stake in flagship TV channel La7 to local media company Cairo Communications as part of the telco’s debt cutting and network investment plans.
Telecom Italia Media (TI Media) said its board mandated chairman Severino Salvemini yesterday to finalise the agreement, which will see it receive a consideration of just €1m.
Under the terms of the deal, which excludes TI Media’s 51% stake in music channel MTV Italia, Telecom Italia will waive €100m in receivables due from the media unit. Before shares are transferred, La7 will be recapitalised so it is in a positive financial position of at least €88m. The recapitalisation will also help the company achieve contractually-agreed shareholder equity of €138m, TI Media said.
The deal, subject to regulatory approval, enables Telecom Italia to keep network operator Telecom Italia Media Broadcasting within the group, while relieving the media unit of providing financial support to loss-making La7.
The telco had previously considered selling its entire 77.7% stake in the media unit to help cut debts of about €28bn and finance much-needed investments in network infrastructure.
TI Media posted revenues for 2012 of €222.7m, down €15.5m year-on-year, which the company said was partly due to La7’s €15.7m decline in revenues.
La7 posted a net loss of €66.3m for the year, citing higher programming costs and fewer advertisements.
Telecom Italia reported revenues of €29.5bn in its preliminary FY 2012 results, down 0.5% in organic terms year-on-year. EBITDA was down 2% in organic terms to €11.67bn. Adjusted net financial debt totalled €28.27bn, which is €2.14bn less than at the end of 2011.
Commenting on the results in February, Telecom Italia CEO Franco Bernabe said: “The group continues to pursue debt reduction through robust cash generation, which will help to fund the development of network infrastructure in Italy and abroad, which we believe is crucial.”
Telecom Italia has decided to postpone its planned hybrid debt securities programme of up to €3bn until market conditions improve.
