Pirelli Chairman Says Will Invest In Areas "Which Can Create Value"

SANTA MARGHERITA, Italy -(Dow Jones)- Pirelli Chairman Marco Tronchheti Provera Monday said he plans to invest the cash which Pirelli will earn from the sale of a stake in Telecom Italia in its tires, energy and photonics businesses.

"We will review our strategy in the coming months in order to have reasonable certainty of picking the areas that can best create value," he said at a press conference held to discuss the sale of the stake.

Tronchetti Provera declined to provide further details for the time being, noting that Pirelli's sale of its indirect stake in Telecom Italia "only closed two days ago."

Spain's phone giant Telefonica and a group of Italian financial heavyweights Saturday bought 100% of Olimpia, Telecom Italia's largest shareholder, for EUR4.1 billion in a deal that ensures that the company remains under Italian control, as urged by the Italian government.

Tronchetti Provera Monday said he wanted to "turn the page" on his seven-year investment in Telecom Italia and on the political "interference" that he said had been exerted by the government during his talks to sell the controlling stake.

"Politicians have a hard time seeing telecommunications privatized," he said. "So choices that should be made freely by the entrepreneurs that buy them - and not just in Italy - are the subject of political interference."

He was referring to not one but two incidents in which the Italian government influenced the course of Pirelli's talks to sell its stake.

In the summer he held advanced talks with News Corp. Chairman Rupert Murdoch about a possible content-and-equity deal. However, those talks put Tronchetti Provera on a collision course with Italian Prime Minister Romano Prodi, who feared that Italian ownership of the former state telecom monopoly was slipping. The pair feuded openly, and Tronchetti Provera ultimately resigned as chairman of Telecom Italia in September, citing political pressure, although he remained the largest shareholder through Pirelli.

More recently, he entered into exclusive negotiations with AT&T of the USA and America Movil of Mexico. Italian politicians reacted bitterly to those talks, and AT&T pulled out, complaining about political uncertainties.

Tronchetti Provera said Monday that he didn't want the government's interference in the Telecom Italia stake sale "to give the impression that the Italian business world is a bad place."

He added, "What happened was a single episode. It can happen."

Asked if the banks and Telefonica would be able to give Telecom Italia the stability to make the strategic changes it needs to be competitive, he said "the new shareholders can give support to the management for their plans to create one of Europe's most important telecoms companies."

He said the fact that a group of Italian financial institutions stepped up to the plate to ensure Italian control of Telecom was a sign that "the financial world has moved to support Italian industry."

"The country is modernizing, gradually," he said. "Our political situation, right now, is objectively difficult."

He was referring to the fact that Prime Minister's government coalition has a very slim majority, and includes several far-left parties that put social programs and job security ahead of business-friendly policies.

-By Jennifer Clark, Dow Jones Newswires; 39 335 833 5761; jennifer.clark@dowjones.com

(END) Dow Jones Newswires "

Posted to the site on 30th April 2007