Telecom Italia (TI) has confirmed it intends to go ahead with the spinoff of its fixed-line network following the regulator’s positive preliminary assessment of the plan.
In mid-July, the Italian incumbent had suspended the plan until proposed changes…
Telecom Italia (TI) has confirmed it intends to go ahead with the spinoff of its fixed-line network following the regulator’s positive preliminary assessment of the plan.
In mid-July, the Italian incumbent had suspended the plan until proposed changes to Italian telecoms regulations became clear. The week prior, watchdog Agcom had proposed a reduction to the rates TI’s rivals must pay to access its fixed-line network.
Commenting on the spinoff as part of TI’s H1 2013 report, chairman and CEO Franco Bernabe said the company plans to proceed with the plan as announced on 30 May now that Agcom has officially confirmed its positive preliminary assessment and affirmed its “reliability and appropriateness”.
TI’s 30 May announcement stated that the spinoff plan would see the new company own the assets and resources for managing and developing the passive access network (both copper and fibre) and the active components of the fibre network, reportedly valued at up to €14bn (US$18.16bn).
TI said the new structure would guarantee all licensed operators access to the fixed-line network. The plan is expected to trigger major changes to the regulatory framework with Agcom saying it will launch a coordinated analysis of the market in September.
The Italian operator reported revenues for H1 2013 of €13.76bn, down 2.7% from the same period last year. EBITDA was down 6.8% to €5.24bn. The telco posted a net loss of €1.4bn for the period, largely due to goodwill write-downs of €2.2bn. Adjusted net debt stood at €28.81bn as of 30 June, down €1.5bn on the previous year’ result. TI aims to reduce this to €27bn by the end of the year.
Commenting on the results, Bernabe said: “The first half of 2013 was affected by the fragility of the domestic economic framework and by a reduction in economic growth in Latin American countries.” In Italy, Bernabe said continuing price pressure, especially in the mobile market, and regulatory issues had a negative effect on results.
He said the company expects a gradual easing of price pressures in H2, a more stable regulatory framework and an improvement in the economy. He noted that the company is implementing “significant actions” to improve its operational efficiency and reach its end-of-year deleveraging target.
Meanwhile, on a conference call with analysts on the results, Bernabe said that while Brazilian unit TIM Participacoes remains a core asset, he would be ready to consider selling it for the right price.
