T.Italia to assess Brazil, fixed-line options- sources
MILAN, Nov 27 (Reuters) - Telecom Italia (TLIT.MI) will discuss its business in Brazil, where its key investor Telefonica (TEF.MC) also operates, at a meeting next week but is unlikely to sell the unit, sources close to the talks said.
The Brazil unit, TIM Participacoes SA (TCSL4.SA) (TSU.N), has seen the highest growth for years in the group. In the third quarter it swung back to profit, helped by steady client base growth, after suffering earlier on from the financial crisis.
Italy's former telecoms monopoly will update investors on its plans at a Dec. 3 presentation in London after its board meets on Dec. 2. Chief Executive Officer Franco Bernabe is under pressure to prove he is turning the company around.
Telecom Italia shares have halved in value from a year ago partly over doubts related to its strategy. They are trading at around one euro, giving it a market value of some 18 billion euros.
Bernabe has also been given a Dec. 8 deadline by the telecoms regulator to outline how he will make the company's fixed-line network more open to competitors.
Bernabe has resisted calls for the fixed line network in Italy to be split from the parent and then to sell a minority stake. He has not taken a position on whether or not the company should consider selling the Brazilian unit.
However, shares rose on Wednesday on a report in Il Sole 24 Ore newspaper which said he might consider the split or a sale of the Brazil unit.
At the same time, talks with Libyan funds over making an investment in the operator seem at best stalled, after Bernabe ruled out for now a capital increase reserved for sovereign funds. Libya's envoy to Italy also has said the country only wants to invest in companies without debt problems.
From next week's meeting analysts are expecting more details on cost-cutting efforts at the operator, whose 37 billion euros ($47.73 billion) of debt are double its market value.
They are also looking for any plans to shed assets like the Brazil unit.
It will be discussed at a two-part board meeting but the unit remains core to the company, a source close to the matter said.
There have already been changes in the Brazil unit's management.
"The Brazil board meeting to be held in the morning has been scheduled for some time and was called to discuss Telecom's progress in that area after the weak results posted over the summer," the source said.
"Brazil remains core to the group, at least until there is a radical change in strategy, which is not expected right now."
