By Daniele Lepido
July 15 (Bloomberg) -- Telecom Italia SpA’s board put on hold a plan to spin off its fixed-line assets, saying last week’s decision by the country’s communications regulator to cut
access fees to the network may “affect its feasibility.”
Telecom Italia directors reviewed the project at a meeting in Milan today, according to a stock-exchange statement. “Before proceeding with further stages of implementation of
this plan, the consistency of its content and the regulatory path with the underlying assumptions of the plan must be verified,” Telecom Italia said in the statement.
The Italian regulator, known as Agcom, decided July 11 to reduce the fees rivals have to pay to access Telecom Italia’s network. The spinoff project, in the making for more than a year and approved by the board in late May, is seen as a way for the indebted carrier to raise funds and to bargain for lighter regulations.
“The uncertainties introduced by recent decisions taken by Agcom might affect its feasibility,” Telecom Italia said.
Potentially halting the creation of a new company, with assets valued at about 14 billion euros ($18 billion) and as many as 20,000 workers, would put Milan-based Telecom Italia
back to square one as its stock trades at the lowest level in almost 16 years and its debt rating is one step shy of junk.
Talks to combine its Italian wireless assets with Hutchison Whampoa Ltd.’s local unit unravelled this month because of disagreements over valuation, people familiar with the matter have said.
Copper Network
“Agcom’s stance suggests a loss of control hence the breakup of Telecom Italia,” Robin Bienenstock, an analyst at Sanford C. Bernstein in London, wrote in a note today. “Telecom
Italia in pieces would be more valuable to Italy and Telecom Italia shareholders.”
Telecom Italia, led by Chairman and Chief Executive Officer Franco Bernabe, closed little changed at 50.4 euro cents in Milan. The stock dropped 4.7 percent on July 12, a day after
Agcom cut the price for renting so-called “last-mile” access to Telecom Italia’s copper network by 6.5 percent.
Franco Lombardi, the head of minority shareholder group Asati, said in a letter to the board today that the slump makes “a significant recovery of the stock, near a record low,
improbable and makes Telecom Italia easy prey for non-European operators at a cheap price.”
Telecom Italia was betting on using the spinoff to get lighter regulatory scrutiny, letting it focus on faster-growing services such as data and wireless. While phone companies have
tried separating fixed-line businesses before, fully carving out an access network -- considered strategic by many governments --
would be unseen among European carriers.
As part of the spinoff plan, Telecom Italia is in talks to sell a stake in the new company to state-owned lender Cassa Depositi e Prestiti.
For Related News and Information:
Telecom Italia Ordered by Regulator to Cut Grid-Access Fee 6.5%
NXTW NSN MPS3OL6JTSEK
Telecom Italia to Get Lighter Rules for Full Network Spinoff
NXTW NSN MPO4YF6K5157
Telecom Italia Halts Talks With Hutchison on Mobile Merger
NXTW NSN MPGHF86JTSE9
Top Technology Stories: TTOP
Telecom Italia Relative Value: TIT IM RV
--Editors: Kenneth Wong, Dan Liefgreen
To contact the reporter on this story:
Daniele Lepido in Milan at +39-02-8064-4266 or dlepido1@bloomberg.net
To contact the editor responsible for this story:
Kenneth Wong at +49-30-70010-6215 or kwong11@bloomberg.net
|
.jpg){kind=logo}
