(Adds details on deal under discussion)
By Gianluca Semeraro and Giselda Vagnoni
ROME/MILAN Aug 13 Telecom Italia
Chief Executive Marco Patuano met Vivendi chairman Vincent
Bollore on Wednesday to discuss an offer for the French group's
Brazilian broadband unit GVT, two sources with knowledge of the
Although no bid has yet been made, Telecom Italia is
proposing to merge its Brazilian mobile business TIM Brasil
with GVT, and in exchange Vivendi would take a stake
in the Italian group, one of the sources said after the meeting.
In the deal structure being discussed, Telecom Italia would
not launch a capital increase to finance the acquisition, the
person added. It remains to be seen whether there will be a
capital increase at TIM Brasil.
This counters predictions from analysts at Citigroup and
other banks that a cash call would be needed to fund the
acquisition of GVT. Telecom Italia has been carrying out asset
disposals in Argentina and elsewhere to help fund costly network
Telecom Italia, which is seeking to prevent rival bidder
Telefonica from buying GVT, could put submit its offer
to Vivendi by the end of the month, the person added.
Alberto Nagel, the CEO of Mediobanca, which is advising
Telecom Italia, was present at the meeting which took place in
Paris, said the source.
Telecom Italia and Vivendi declined to comment.
French billionaire Bollore, a long-standing investor in
Italy, is a leading shareholder of Mediobanca, the
influential investment bank that has for long been at the heart
of Italy's high finance. Bollore is also the biggest shareholder
of Vivendi with a 5 percent stake.
Mediobanca used to control Telecom Italia along with
Telefonica and other financial players via the Telco holding
company, which owns 22.45 percent of the company. Telco is being
dissolved because Mediobanca, Generali, and Intesa want to sell
their stakes in Telecom Italia.
Once Telco is dissolved, Mediobanca's stake in Telecom
Italia will be 1.64 percent.
Sources told Reuters last week that Telecom Italia was in
talks with Vivendi over a possible bid for GVT as it sought to
head off a 6.7 billion euro ($8.9 billion) bid from Spanish
Telefonica is also Telecom Italia's biggest shareholder, and
a competitor in mobile in Brazil.
Patuano had earlier pledged not to get drawn into a bidding
war for GVT, saying after second-quarter results that he will
not make any "crazy" acquisitions in Brazil.
The Latin American country is a crucial market for both
Telecom Italia and Telefonica because it still has growth
potential, in contrast to relatively saturated European markets.
A tie-up between TIM Brasil and GVT would create a stronger
competitor to Telefonica's local unit Vivo. If
Telefonica's bid succeeds, TIM Brasil's position would be
weakened because it would remain the only mobile operator in
Brazil without a large broadband business.
Italian newspaper Il Messaggero said on Wednesday Patuano
would meet Bollore shortly to discuss "an equity and industrial
alliance" between TIM Brasil and GVT.
Telefonica last week made an unexpected 6.7 billion euro bid
for GVT, which gives Vivendi an option to take possession of an
8.3 percent stake in Telecom Italia from Telefonica.
(1 US dollar = 0.7488 euro)
(Reporting by Giselda Vagnoni and Gianluca Semeraro; Additional
reporting by Stephen Jewkes; Editing by Erica Billingham, Pravin
Char and David Evans)