Telecom Italia Reported Seeking Outside Investor

Telecom Italia is reported to be seeking a significant new investor in the company - possibly a soverign wealth fund - to help pay down its $52 billion of debt. The Reuters news agency, citing an unnamed source said that "the investor could be Libyan or (Gulf) Arab," 

Telecom Italia "is working on the entry of a new partner and on the splitting off of the fixed network" to a new company, said the source, who spoke on condition of anonymity.

The talks are at an early stage and it is not expected that anything will be proposed at the next board meeting due next week.

The Italian Il Messaggero newspaper had earlier reported that the company is seeking to raise some US$4.3 billion in a rights issue, with Libya's Lafico fund taking a stake of 5 to 6 percent in the company. Another newspaper, La Stampa had however suggested that the prospective investor would take up to 10% of the company - and that Arab wealth funds were the lead runners.

Telecom Italia is currently controlled by Telco, a holding company owned by Telefonica, Italian banks Mediobanca and Intesa Sanpaolo, insurer Generali and the Benetton family. Spain's Telefonica took a stake in Telco last year and has been reportedly trying to increase its direct holding in Telecom Italia, without success since then. There is some speculation that, considering the Byzantine nature of Italian business interests the talks with overseas wealth funds may be seeking a capital injection not just to pay down debt, but to dilute Telefonica's holding in the company.

Yesterday, the company had called media reports which had suggested that the company is considering the spinoff of its access network into a new company, as speculation.

Following a request from securities regulator Consob, Telecom Italia confirmed in a statement its revised business plan will be unveiled by year end.

"The new plan will be communicated by the end of the year and, in any case, only at the conclusion of the decision-making process which reserves for the board of directors the approval of strategic, industrial and financial plans, as is the case with all operations of particular significance," the company said.

On the web: Reuters - Il Messaggero - La Stampa

Posted to the site on 17th September 2008