May 3, 2013 / 12:05 PM / in 5 years

Telecom Italia says too early to talk of done deal on fixed network

MILAN (Reuters) - Italian phone company Telecom Italia (TLIT.MI) said on Friday it was too soon to talk about any done deal regarding its fixed-line network after an Italian newspaper report said it could place up to 60 percent of the network on the market.

The former telecom monopoly is considering spinning off its access network and offloading around 45-60 percent of the unit, Il Messaggero said in a report citing a draft copy of a term sheet the company’s management is drawing up.

Telecom’s network could be worth 12 billion to 15 billion euros ($16-20 billion), according to analysts.

The newspaper said 30-40 percent of the capital could be floated on the Italian Stock Exchange and 15-20 percent sold to an investment fund owned by state-controlled financing company Cassa Depositi e Prestiti (CDP).

Telecom Italia, controlled by investor vehicle Telco, has been in talks for months to separate its domestic fixed-line network into a new company in which CDP could buy a significant minority stake.

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 Hong Kong-based Hutchison Whampoa 0013.HK about a tie-up with Hutchison’s 3 Italia unit.

Il Messaggero said the board would approve Chairman Franco Bernabe’s request to formally start negotiations.

“At present, any presumed conclusion of an agreement with possible mobile or fixed-line partners, company reorganization or the prospective listing of a ”Network Company“ are to be considered premature and the subject of mere speculation,” a Telecom Italia spokesman told Reuters in an emailed statement.

    Telecom Italia’s fixed-line network is considered a strategic and politically sensitive asset. Its spin-off could ease any deal with Hutchison and also help Telecom Italia cut its debt, now exceeding 28 billion euros.

    The CDP investment fund, called Italian Strategic Fund, has already invested in telecoms network group Metroweb which plans to build a fiber-optic network in Italy’s largest cities.

    Telco, owned by Spain’s Telefonica (TEF.MC) and Italy’s financial institutions Mediobanca (MDBI.MI), Generali (GASI.MI) and Intesa Sanpaolo (ISP.MI), is the biggest shareholder in Telecom Italia with a 22.4 percent stake.

    Shares in Telecom Italia were trading 0.6 percent higher at 0.65 euros at 1139 GMT.

    ($1 = 0.7649 euros)

    Reporting by Stephen Jewkes; Editing by Elaine Hardcastle

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