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UPDATE 2-Telecom Italia network spin-off wins regulator's blessing
July 9, 2013 / 9:36 AM / 4 years ago

UPDATE 2-Telecom Italia network spin-off wins regulator's blessing

* Regulator sees significant benefits for Telecom

* Investors cautious as spin-off seen taking time to complete

* Shares up 3.8 percent, outperform sector

By Alberto Sisto

ROME, July 9 (Reuters) - Telecom Italia’s plan to spin off its domestic phone lines won plaudits on Tuesday from the telecommunications regulator, who said the move was bold and innovative and could earn the former monopoly regulatory benefits.

“The broader and deeper the separation, the more significant the regulatory dividend,” Angelo Marcello Cardani, president of regulator AGCOM, said in his annual speech before parliament in Rome.

The board of Italy’s biggest phone company approved in May a plan to hive off its fixed-line access assets into a new company, a move that could free up resources to cut its more than 28 billion euros ($36 billion) of debt.

Splitting off the fixed lines would give all telecom operators equal access to the network - a European Union requirement - radically changing the Italian market.

Italy’s biggest phone group by market share wants lighter regulation on the spin-off plan so it can compete in the domestic market on a level playing field.

Telecom Italia has to abide by stricter rules than rivals Vodafone, Fastweb and Vimpelcom’s Wind because it owns the fixed-line network, and all its new commercial offers still need AGCOM approval.

Telecom Italia Chairman Franco Bernabe said on Tuesday the group was not asking for favours from the regulator, adding he was confident the spin-off would benefit the country, consumers and competition.

RMJ fund manager Alessandro Frigerio welcomed Tuesday’s comments by the regulator but warned that the spin-off would take time to complete because the issue was complex and politically sensitive.

Bernabe has previously said he aimed for a deal with AGCOM by early 2014. A source close to the situation has said the separation could take up to 18 months to complete.

Telecom Italia’s access network, estimated to be worth between 12 billion and 15 billion euros, links millions of users, from private citizens to government agencies, banks and businesses.

Earlier in June Telecom Italia ended talks with Hutchison Whampoa on a possible tie-up, preferring to focus on the spin-off, which could pave the way for a sale of a stake in the network firm to state-backed fund Cassa Depositi e Prestiti.

Shares in Telecom Italia rose 3.8 percent to 0.54 euros at 1424 GMT, outperforming a 0.2 percent gain in the European telecoms index. The stock was close to a 16 year low reached in mid-June.

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