Telefonica wants to keep stake in Telecom Italia-CFO

Wed Nov 14, 2012 1:01pm EST

* Telefonica to remain shareholder in Telecom Italia-CFO

* Sees no need for capital increase at Tel Italia-CFO

* Sawiris seeks to invest in Tel Italia via cap increase

By Leila Abboud and Robert Hetz

BARCELONA/MADRID, Nov 14 (Reuters) - Spain's Telefonica wants to remain a long-term shareholder in Telecom Italia and ruled out selling its stake as part of a debt reduction programme, its chief financial officer said on Wednesday.

CFO Angel Vila, speaking at a Morgan Stanley TMT conference, also said Telecom Italia did not need a capital increase, referring to a proposal made by Egyptian tycoon Naguib Sawiris on Monday to invest in the debt-laden Italian incumbent via such an operation.

"We are stable investors in Telecom Italia, and we are not considering monetising the stake in Telco," said Vila, referring to the Telco holding company that owns 22.4 percent of Telecom Italia.

Telecom Italia said on Monday that it would consider Sawiris' proposal and had presented some details to its board, but neither side disclosed the size and the objectives of the potential investment.

How big shareholders in Telecom Italia, including Telefonica, come out on the Sawiris offer will play a role in whether it gains traction, analysts have said.

Telecom Italia is controlled by an unlisted holding company, Telco, made up of Telefonica and three Italian financial institutions, which collectively own 22.4 percent of the group. Telefonica owns roughly 10 percent of Telecom Italia.

Insurer Assicurazioni Generali, and banks Mediobanca and Intesa Sanpaolo are also shareholders.

It is not clear how big of an investment Sawiris wants to make in Telecom Italia, although press reports have said between 2-5 billion euros. It is also not clear whether a capital increase would be open to all investors or only Sawiris, and what impact it would have on Telco.

Vila declined to comment on the details of Sawiris proposal or on whether Telefonica would accept to be diluted if a capital increase were to take place.

"We have not received any offer from Mr. Sawiris, and we are not expecting any offer from him. It seems he sent a letter to the company, so it is up to them to speak."

Asked whether Telefonica would accept to be diluted, he said only: "It's not clear that TI would need any capital increase at all, and ... prefer not to comment on the speculation."

A spokesman clarified in an emailed statement after Vila's remarks that Telefonica had not received an offer from Sawiris for its Telco stake, refuting a mid-October report in the Italian press. The spokesman also added that Telefonica does not believe Telecom Italia needs a capital increase.

(Reporting by Leila Abboud, Robert Hetz and Clare Kane; Editing by Jane Merriman)

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