* Term sheet foresees sale of stake in newly created company
* Telecom mulls listing of stake of network company-sources
* Telecom says idea of any done deal premature
* Fixed-line network could be worth 12-15 bln euro
* Shares rise 1 percent
(Recasts with source on term sheet, sources on possible
By Luca Trogni and Stefano Rebaudo
MILAN, May 3 Telecom Italia has asked
state financing body CDP to buy a stake in its fixed-line
network, a source with knowledge of the deal said, in a move
that could smooth a tie-up between the Italian firm and Hong
Kong's Hutchison Whampoa.
The source said Telecom Italia had sent CDP a draft proposal
suggesting it purchase a stake in a yet-to-be-created new
network company via the Fondo Strategico Italiano (FSI), a fund
controlled by the CDP.
In April Telecom Italia asked a panel of directors to look
at a possible tie-up with Hutchison which would include merging
its 3 Italia mobile unit into Telecom Italia.
To fend off objections from the government about national
networks falling into foreign hands, Telecom Italia at the same
time asked its management to look into the feasibility of
spinning off the network, which according to some analyst
estimates could be worth 12-15 billion euros ($16-20 billion).
"Telecom Italia sent a draft term sheet to the CDP
yesterday," the source told Reuters, without elaborating on the
A second source said Telecom Italia was also considering a
possible listing of a stake in the newly created network
company, adding this could happen before the completion of a
deal with CDP.
Il Messaggero newspaper reported Telecom Italia was thinking
of selling 15-20 percent of the network company to FSI and
floating an extra 30-40 percent on the Italian Stock Exchange.
The future of the network will be discussed on May 8 at a
board meeting which is also due to decide whether to pursue
talks with Hutchison, which is seeking control of the former
state-owned Italian telecoms monopoly.
Telecom Italia said in a statement on Friday it was too soon
to talk about a done deal regarding the network or a partnership
with other players.
"At present, any presumed conclusion of an agreement with
possible mobile or fixed-line partners, company reorganisation
or the prospective listing of a "Network Company" are to be
considered premature and the subject of mere speculation," a
company spokesman told Reuters in an emailed statement.
Italian politicians have voiced opposition to foreign
ownership of the fixed-line network, an asset deemed to be of
strategic national importance. Rome holds special powers over
Telecom Italia and can veto M&A operations.
A sale of part or all of the network to the state-backed
fund could help dispel political concerns, which are seen as a
major hurdle to any deal with the Hong Kong-based group.
A senior banker not involved in the negotiations said a
partial listing of Telecom Italia's network was the most likely
option as it would allow the company to cut debt now exceeding
28 billion euros.
It was not clear whether Telecom would retain a majority
stake in the network.
Sources with knowledge of the negotiations have said a deal
with Hutchison would see the Hong Kong group buy Telecom
Italia's shares from investor vehicle Telco, the biggest
shareholder in the Italian company with a 22.4 percent stake.
However, one of those sources said on Friday one option
under consideration was for Hutchison to become a shareholder of
Telco through a capital increase.
Telco is owned by Spain's Telefonica and Italy's
financial institutions Mediobanca, Generali
and Intesa Sanpaolo.
Shares in Telecom Italia closed 1 percent higher at 0.65
($1 = 0.7649 euros)
(Additional reporting by Stephen Jewkes, Sophie Sassard and
Arno Schuetze, writing by Danilo Masoni; Editing by Sophie
Walker and Paola Arosio)