+------------------------------------------------------------------------------+
Telecom Italia Is Said to Withdraw Landline Spinoff Proposal (1) 2013-10-21 18:51:05.212 GMT
(Updates with shares in fifth paragraph.)
By Daniele Lepido Oct. 21 (Bloomberg) -- Telecom Italia SpA plans to recommend to its board on Nov. 7 that a proposal to spin off the carrier’s telephone network be withdrawn, according to three people familiar with the matter. Scrapping the spinoff, which was approved by directors in May, would officially end a project already stalled by a July regulatory decision, said the people, who asked not to be identified because the deliberations are confidential and a final decision hasn’t been made. A separation of Telecom Italia’s copper and fiber network, valued at about 14 billion euros ($19 billion), had been in the making for more than a year and would have provided a new way to cut debt, as well as leverage to bargain for lighter regulations. Italy’s Agcom regulator ordered a cut in the fees the Milan-based carrier demands from rivals for using its landline grid, forcing the company to put the plans on hold. The process of the spinoff plan, championed by former Chief Executive Officer Franco Bernabe, has slowed after shareholder Telefonica SA agreed last month to gradually increase its influence in Telecom Italia. Madrid-based Telefonica prefers Telecom Italia to turn around a slide in the company’s revenue in its domestic market without carving out the fixed-line grid, said two people familiar with the Spanish phone company’s thinking. Telecom Italia shares fell 1.8 percent today, to 74 cents. The stock has gained 14 percent since Bernabe’s resignation.
Ratings Downgrade
Telecom Italia and Telefonica spokesmen declined to comment. Bernabe resigned this month and his deputy Marco Patuano was put in charge of the carrier as it seeks a new chairman. The Italian government signed a decree giving the state a say should the landline network be sold to a foreign buyer, deeming the telecommunications industry as being of strategic interest. A spinoff would take at least six to 12 months and is unlikely to ease pressure on its debt ratings, Fitch Ratings said in a statement the day after Bernabe stepped down. A week later, Moody’s Investors Service cut its rating for the carrier to junk, a move Standard & Poor’s called “the more likely outcome” when it completes its own review by the end of next month.
For Related News and Information: Telecom Italia Ordered to Cut Grid-Access Fee by Regulator NXTW NSN MPSJC06KLVR7 <GO> Telecom Italia Board Is Said to Approve Network Spinoff Plan NXTW NSN MNM8II6JIJXQ <GO> Telecom Italia Said to Value Fixed-Line Asset at $18 Billion NXTW NSN MN93WS6KLVRO <GO> Top Technology Stories: TTOP <GO> Top Italy Stories: TOP IT <GO>
--With assistance from Manuel Baigorri in Madrid. Editors: Kenneth Wong, Heather Smith
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