Telecom Italia (TI) core shareholders have reportedly rejected an €800m (US$1bn) offer from Telefonica to buy part of their stakes. Potential changes to the ownership of the Italian incumbent are expected to be discussed at a delayed board meeting on 3…
Telecom Italia (TI) core shareholders have reportedly rejected an €800m (US$1bn) offer from Telefonica to buy part of their stakes. Potential changes to the ownership of the Italian incumbent are expected to be discussed at a delayed board meeting on 3 October.
Telefonica made the offer to fellow members of Telco, the holding company which owns 22.4% of Telecom Italia, in early September in an effort to convince them to retain shares, Italian newspaper Il Sol 24 Ore reported without citing sources.
This would have enabled the Spanish company, Telco’s largest shareholder, to avoid potential antitrust problems in Latin American countries where it and TI are rivals, the report stated.
However, the other Telco members – Italian financial organisations Assicurazioni Generali, Intesa Sanpaolo and Mediobanca – reportedly declined the offer after what the paper described as “complicated” and “difficult” negotiations.
Various local and international media have reported that Telefonica, which has an indirect 10.5% stake in TI via Telco, is still seeking to boost its stake in TI by acquiring other Telco members’ shares but there has been no agreement so far.
According to the Italian report, an outright merger between TI and Telefonica is out of the question given the former’s massive debt pile and risk of a credit rating downgrade as well as the possible antitrust problems in Latin America. A potential sale of TI’s Brazilian mobile unit, TIM Brasil, could be considered as a preparatory step toward a potential integration between the two telcos, the report added. However, this would not solve existing issues among Telco members and would take time to implement.
The Italian Telco members are reportedly all open to selling their stakes and are said to have been approached by international potential buyers. Egyptian tycoon Naguib Sawiris has confirmed his interest in taking a stake in TI and reports earlier this month said US incumbent AT&T, currently eyeing opportunities in Europe, and Carlos Slim’s Mexico-based America Movil (AMX), which already has assets in Austria and the Netherlands, are also interested. AT&T has declined to comment on the matter, while AMX CFO Carlos Garcia Morena has denied his company has had contact with TI shareholders.
The TI board was expected to discuss potential changes to its ownership structure at a meeting on 19 September, however this has been postponed to 3 October. According to the Italian report, there may still be informal talks on 19 September to take stock of the situation.
This means board members will now meet after a Telco shareholder covenant enabling members to request an early exit from the pact expires on 28 September.
Telecom Italia and Telefonica have declined to comment, while the three Italian Telco members were not immediately available.
