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Telecom Italia : chairman keeps open mind about possible network spin-off

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10/05/2017 | 01:35pm CEST
FILE PHOTO:A Telecom Italia tower is pictured in Rome

CAPRI, Italy (Reuters) - Telecom Italia (TIM) (>> Telecom Italia) chairman Arnaud de Puyfontaine is keeping an open mind about possibly separating its fixed-line network, he said on Thursday, a move favoured by some Italian government officials.

CAPRI, Italy (Reuters) - Telecom Italia (TIM) (>> Telecom Italia) chairman Arnaud de Puyfontaine is keeping an open mind about possibly separating its fixed-line network, he said on Thursday, a move favoured by some Italian government officials.

The strategy of Italy's biggest phone group has become a hot topic among investors after French media company Vivendi (>> Vivendi), TIM's largest shareholder, tightened its grip on the firm and appointed one of its top executives as TIM's CEO.

Politicians in Rome have also become increasingly concerned about Vivendi's influence over TIM, which is considered a strategic company.

De Puyfontaine, who is also Vivendi's CEO, became TIM's executive chairman earlier this year, while last month Vivendi's former chief convergence officer, Amos Genish, became TIM's CEO.

"I have no preconception on anything as regards to TIM or what we will do and how we will build the success of the company," de Puyfontaine told journalists, when asked whether the company would consider a spin-off of the network.

"I am very pragmatic ... I just want to make TIM, as an incumbent, a company that is going to make the success and the pride of Italy, its government and its customers," he said on the sidelines of a conference on the island of Capri.

Italian politicians have been calling on and off since 2006 for TIM's network to be transferred to a state-controlled entity as Rome considers it a strategic asset that should be a neutral platform open to all phone companies.

The heavily-indebted company has also been criticised for putting off costly upgrades to its ageing copper network to provide faster internet connections and is now facing competition from Open Fiber, owned by state-controlled utility Enel and state-owned lender Cassa Depositi e Prestiti (CDP).

Plans to transfer TIM's network, which according to some estimates could be worth up to 15 billion euros ($18 billion), have foundered in the past over its valuation and because TIM insisted on hanging onto the business.

However, the idea is gaining traction once again with a view to fostering cooperation to allow a speedy roll-out of an ultra-fast broadband network across Italy.

A TIM spokesman reiterated on Thursday that the network remained a strategic asset for the group and there were no plans to sell or spin it off.

De Puyfontaine said he was preparing with Genish a new strategy for the company.

"We will be able to be more precise soon," he said.

Genish is TIM's third CEO in less than two years, leaving investors guessing about Vivendi's ultimate aim for the company: Use it as a pillar of its plan to create a southern European media empire or as an asset to trade in the next wave of mergers in European telecoms.

Some fund investors expect Genish to spin off the fixed-line network, and perhaps sell TIM's Brazilian business before, ultimately, merging the remaining business with a bigger European rival.

TIM shares were up 1.9 percent at 0933 GMT, within a European telecommunications index <.SXKP> up 0.4 percent.

(Editing by Mark Potter and Jane Merriman)

By Agnieszka Flak

Stocks treated in this article : Vivendi, Telecom Italia
Stocks mentioned in the article
ChangeLast1st jan.
TELECOM ITALIA 0.17% 0.606 End-of-day quote.-16.03%
VIVENDI -1.39% 21.21 Real-time Quote.-4.06%
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Financials (€)
Sales 2018 19 439 M
EBIT 2018 3 989 M
Net income 2018 1 537 M
Debt 2018 25 357 M
Yield 2018 1,14%
P/E ratio 2018 8,82
P/E ratio 2019 7,85
EV / Sales 2018 1,95x
EV / Sales 2019 1,89x
Capitalization 12 516 M
Duration : Period :
Telecom Italia Technical Analysis Chart | TIT | IT0003497168 | 4-Traders
Technical analysis trends TELECOM ITALIA
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus OUTPERFORM
Number of Analysts 25
Average target price 0,92 €
Spread / Average Target 51%
EPS Revisions
Amos Genish Chief Executive Officer & Director
Fulvio Conti Chairman
Piergiorgio Peluso CFO, Head-Administration, Finance & Control
Roberto Mazzilli Head-Information Technology & Security Compliance
Elisabetta Romano Chief Technology Officer
Sector and Competitors
1st jan.Capitalization (M$)
TELECOM ITALIA-16.03%14 502
TELEFONICA-8.16%44 989