* Rejects 3 bln euro offer from Egypt's Sawiris
* Takes step towards possible copper infrastructure stake
* Wants improved bids for Telecom Italia Media
(Adds source comments on board meeting)
By Danilo Masoni
MILAN, Dec 6 Telecom Italia on
Thursday rejected a 3 billion euro ($3.9 billion) investment
offer from Egyptian tycoon Naguib Sawiris and will take more
time to consider the possible sale of a stake in its copper
The heavily indebted company said in a statement that its
board had decided "not to proceed further" with regards to an
expression of interest from Sawiris, who had proposed to invest
capital to engineer a strategic turnaround.
After an eight-hour meeting of the group's board, it asked
management to further investigate a possible sale of a stake in
its copper network to state fund Cassa Depositi e Prestiti
The biggest obstacle to an agreement with the CDP appears to
be the valuation of the network and the governance of the new
company to be set up to manage the infrastructure, people
familiar with the situation have said.
The company also said it wanted to continue negotiations
with the two bidders for its loss-making television unit Telecom
Italia Media to extract a better price.
In its statement, Telecom Italia did not mention any
decision about a possible expansion in Brazil, a major source of
growth in recent years. The company had looked at a possible
purchase of Vivendi's broadband unit GVT.
Sawiris was prepared to pay market prices - or around 0.70
euros per share - as part of a capital increase to help Telecom
Italia pay down debt and bid for GVT.
Telecom Italia's top investors value their stakes on their
books at 1.50 euros per share after several writedowns.
Shares in Telecom Italia fell 1.74 percent to 0.7065 euros
on Thursday before the announcement, underperforming a lower
market, giving the company a market capitalisation of about 13.5
The stock has slumped 70 percent since Spanish competitor
Telefonica and Italian financial groups Mediobanca
, Intesa Sanpaolo and Generali
together bought a controlling 22.4 percent stake in Telecom
Italia in the spring of 2007.
"WORK IN PROGRESS"
After months of contacts between Telecom Italia and CDP, the
board's decision on the fixed-line network, possibly worth up to
15 billion euros, marks the start of formal negotiations for a
possible stake sale.
Chairman Franco Bernabe had previously said that a decision
on whether to go ahead with a separation of the network into a
new company would be taken by year-end.
"The negotiations are serious, let's see where they will
lead to. It's work in progress," a source close to the board
told Reuters. The source did not want to be named.
The Italian government is keen for Telecom Italia to sell to
the CDP a 30 percent stake in the copper network that connects
homes and businesses to the phone network and the Internet.
That would raise cash that could be used to invest in a
faster fibre broadband much-needed by Italian companies.
Europe's fourth-largest economy has long been an Internet
laggard, its creaky networks stunting the development of online
commerce and banking.
A sale of a stake in the network could also accelerate the
Squeezed between the need to pay dividends to its
controlling shareholders and keep a lid on its 29.5 billion
euros of debt, Telecom Italia has struggled to invest in its
home network or expand in growth markets like Latin America.
French operator Vivendi has put its Brazilian unit GVT up
for sale. Telecom Italia, which already owns successful mobile
unit TIM Participacoes in Brazil, has not presented
an offer as the price tag is too high.
Telecom Italia has made debt-cutting a priority since late
2008, reducing net debt by more than 4 billion euros.
($1 = 0.7700 euros)
(Reporting by Danilo Masoni; Editing by Lisa Jucca, Grant
McCool and Phil Berlowitz)