* Group continues to examine spin-off project
* Telecom Italia puts value of network at 13-15 bln euros
* Spin-off could take 18 months - source
* Italian government wants to safeguard network, jobs
(Adds Telecom Italia delaying decision to May 30)
By Danilo Masoni
MILAN, May 23 Telecom Italia has
pushed to the end of the month a decision on whether to spin off
its fixed-line access network, which is proving more complex
than expected due to political and regulatory considerations.
In a statement issued after a board meeting on Thursday,
Italy's biggest phone operator said it would continue to examine
the feasibility of the spin-off. Its board planned to reconvene
on May 30 "to take a final decision," the group added.
Debt-laden Telecom Italia management is pushing for a
separation of the valuable copper network, hoping the move can
help it raise cash and cut debt. Chairman Franco Bernabe had
hoped to reach a decision at Thursday's board meeting.
"The board simply needs more time to examine all the
angles," a source close to the matter told Reuters.
The company is also evaluating a possible tie-up with the
Italian mobile business of Hong Kong-based conglomerate
Hutchison Whampoa, which is targeting a controlling
stake in the Italian operator.
Telecom Italia puts the enterprise value (equity plus debt)
of its fixed-line network at 13-15 billion euros ($16.7-$19.3
billion), a source with direct knowledge of the matter said.
If approved, the spin-off could take up to 18 months to be
completed, the source added.
Telecom Italia's fixed-line network is a profitable asset
that brings the group a steady cash flow since competitors have
to pay for access.
It is also a vital national asset as whoever controls it can
rule over telecommunications connecting banks, government
agencies, companies and homes throughout Italy.
Some Italian politicians consider Hutchison's bid a threat
to national security should the Asian operator end up with
control over Italy's main communications network.
"The network is an asset that is strategic for the security,
growth and competitiveness of the whole county," Industry
Minister Flavio Zanonato said on Wednesday.
Shares in Telecom Italia closed down 1.6 percent. Earlier on
Thursday Standard & Poor's cut the group's rating to BBB- in
light of its 28 billion euro debt pile and tough economic
conditions in its home market.
Any separation of the fixed-line network could pave the way
for state-owned fund Cassa Depositi e Prestiti (CDP) to buy a
stake in the new network company, helping to ease political
concerns of the business falling into foreign hands.
Crucial to any decision on the matter, however, is the
position of Telecom Italia's biggest shareholder Telco, which
controls 22.4 percent of the operator.
Telco is in turn controlled by Spanish telecoms operator
Telefonica, Italian banks IntesaSanpaolo and
Mediobanca and Italian insurer Generali.
Telecom Italia also wants to secure a better regulatory
environment for itself before going ahead with the project. The
changes it is seeking could upset its rivals such as Vodafone
Fastweb and Wind.
($1 = 0.7766 euros)
(Additional reporting by Stephen Jewkes; Writing by Lisa Jucca;
Editing by David Goodman and Mark Potter)