By Francesca Landini and Elvira Pollina
TRENTO, Italy (Reuters) – Telecom Italia (TIM) will pursue a plan to spin off its wireline network from its service operations to maximize asset value for shareholders and reduce its debt, the company’s chief said on Sunday.
Under pressure for years in its fiercely competitive home market, Italy’s former telephony monopoly is looking to revamp its business by unbundling its domestic fixed-line assets to focus on commercial and consumer activities.
As part of a preliminary pact sealed with Italian state-owned bank CDP last week, TIM’s network assets would combine with those of broadband rival Open Fiber to create a national network company majority-owned by CDP.
The new network entity would assume a significant portion of TIM’s debt and domestic staff.
But TIM’s main investor, Vivendi, whose support is critical for any deal to come to fruition, said he is ready to assess other opportunities if the network’s value is not recognized.
“The most important thing is to maximize the value of all assets in the interests of shareholders,” said Telecom chairman Pietro Labriola, speaking of whether the French media giant’s stance could harm the project. CDP, which is TIM’s second largest investor with a 10% stake, also owns 60% of Open Fiber.
Speaking at an event in Trento, Labriola declined to say whether TIM is considering a full exit from its wireline business with an outright sale. He stressed that any spin-off has to cut TIM’s net debt of 23 billion euros.
“It seems to me that all parties are interested in understanding quickly enough whether the plan is viable,” Labriola said, adding that creating a single fiber network could be completed in 12 to 18 months.
Labriola, who took over the company in January, should present on July 7 a three-year plan that will focus on the spin-off of TIM’s operations.
KKR decided to join the TIM-CDP project after TIM rejected the fund’s €10.8 billion bid to gain control of TIM and delist it before splitting its fixed and service assets.
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