Telecom Italia Panel Is Said To Be Divided Over Hutchison
A group of directors appointed by Telecom Italia SpA to review a potential merger with Hutchison Whampoa Ltd. (13)’s local unit remain divided as the Italian company’s board gathers today, according to five people familiar with the matter.
Chief Executive Officer Franco Bernabe, who was asked last month to head a panel to explore a combination of Telecom Italia’s mobile-phone business with Hutchison’s 3 Italia, will brief the board on its findings today. Some members are skeptical about a deal because of differences in valuation for 3 Italia, the people said, asking not to be named because the discussions are private. Shareholder Telefonica SA (TEF) is concerned about potential losses in a transaction, two people said.
Bernabe is betting on a linkup with Hong Kong billionaire Li Ka-shing’s Hutchison to revive a stock that hit a 15-year low last month. Telecom Italia, scheduled to report earnings today, may say first-quarter revenue slumped 8 percent to 6.8 billion euros ($8.9 billion) as consumers cut spending on phone services, according to the average of seven analysts’ estimates complied by Bloomberg.
Valuation Gap
Telecom Italia is 22.4 percent owned by Telco SpA, whose investors include Telefonica, Assicurazioni Generali SpA, Intesa Sanpaolo SpA (ISP) and investment bank Mediobanca SpA. (MB) The shareholders have written down the value of their stakes several times and have considered using Hutchison’s possible entry as new shareholder to facilitate their exit, people familiar with the matter have said.
Complicating the discussion is the valuation of 3 Italia. While the division has a so-called fair value of 1.5 billion euros, the actual figure could differ widely because of accumulated losses amounting to as much as 8 billion euros and the lack of clarity of how much of that can be used to offset taxes, a person familiar with the matter said.
3 Italia had 2012 revenue of about 1.5 billion euros and earnings before interest, taxes, depreciation and amortization of about 90 million euros, another person said, adding that the numbers were restated to meet Italian accounting rules.
A merger would combine Italy’s biggest wireless carrier with the No. 4. Telecom Italia said April 11 that Hutchison wants to become a leading shareholder in the Italian company in any deal. Bernabe will need approval from Telecom Italia’s board to carry out due diligence and pursue formal negotiations with Hong Kong-based Hutchison.
Exploratory Nature’
Representatives for Milan-based Telecom Italia, Telefonica, Generali, Intesa and Mediobanca all declined to comment.
Hutchison reitereated today that “contacts between Telecom Italia SpA (TIT) and 3 Italia SpA on possible business combinations are still very preliminary and of an exploratory nature.”
For Hutchison, Asia’s biggest investor in European wireless networks, Telecom Italia’s high net debt — which reached 28.3 billion euros at the end of 2012 adjusted for some items — is a concern, a person familiar with the matter has said.
Telecom Italia shares sank as low as 54 cents last month, the lowest level since August 1997. They climbed 0.9 percent to 64 cents in Milan yesterday, valuing the company at 11.8 billion euros. Hutchison added 0.2 percent to HK$85.80 at 2:11 p.m. on the Hong Kong exchange.
Network Spinoff
Other panel members evaluating the possible linkup with Hutchison are Telefonica’s Julio Linares, Elio Cosimo Catania from Intesa Sanpaolo SpA, Gabriele Galateri from Assicurazioni Generali SpA (G) and independent director Luigi Zingales.
Italy’s former phone monopoly is divesting assets, cutting jobs and is reviewing a possible spinoff of its fixed-line telephone network in Italy, a move that could generate cash to reinvest in expanding coverage.
That project isn’t expected to be discussed at today’s meeting, two people said. Telecom Italia is considering a sale of an initial 30 percent stake in a new company to state lender Cassa Depositi e Prestiti, which may invest about 2 billion euros, people familiar with the matter said last month. Telecom Italia could also consider an initial public offering of the division in the future, another person said last month.
A group of directors appointed by Telecom Italia SpA to review a potential merger with Hutchison Whampoa Ltd. (13)’s local unit remain divided as the Italian company’s board gathers today, according to five people familiar with the matter.
Chief Executive Officer Franco Bernabe, who was asked last month to head a panel to explore a combination of Telecom Italia’s mobile-phone business with Hutchison’s 3 Italia, will brief the board on its findings today. Some members are skeptical about a deal because of differences in valuation for 3 Italia, the people said, asking not to be named because the discussions are private. Shareholder Telefonica SA (TEF) is concerned about potential losses in a transaction, two people said.
Bernabe is betting on a linkup with Hong Kong billionaire Li Ka-shing’s Hutchison to revive a stock that hit a 15-year low last month. Telecom Italia, scheduled to report earnings today, may say first-quarter revenue slumped 8 percent to 6.8 billion euros ($8.9 billion) as consumers cut spending on phone services, according to the average of seven analysts’ estimates complied by Bloomberg.
Valuation Gap
Telecom Italia is 22.4 percent owned by Telco SpA, whose investors include Telefonica, Assicurazioni Generali SpA, Intesa Sanpaolo SpA (ISP) and investment bank Mediobanca SpA. (MB) The shareholders have written down the value of their stakes several times and have considered using Hutchison’s possible entry as new shareholder to facilitate their exit, people familiar with the matter have said.
Complicating the discussion is the valuation of 3 Italia. While the division has a so-called fair value of 1.5 billion euros, the actual figure could differ widely because of accumulated losses amounting to as much as 8 billion euros and the lack of clarity of how much of that can be used to offset taxes, a person familiar with the matter said.
3 Italia had 2012 revenue of about 1.5 billion euros and earnings before interest, taxes, depreciation and amortization of about 90 million euros, another person said, adding that the numbers were restated to meet Italian accounting rules.
A merger would combine Italy’s biggest wireless carrier with the No. 4. Telecom Italia said April 11 that Hutchison wants to become a leading shareholder in the Italian company in any deal. Bernabe will need approval from Telecom Italia’s board to carry out due diligence and pursue formal negotiations with Hong Kong-based Hutchison.
Exploratory Nature’
Representatives for Milan-based Telecom Italia, Telefonica, Generali, Intesa and Mediobanca all declined to comment.
Hutchison reitereated today that “contacts between Telecom Italia SpA (TIT) and 3 Italia SpA on possible business combinations are still very preliminary and of an exploratory nature.”
For Hutchison, Asia’s biggest investor in European wireless networks, Telecom Italia’s high net debt — which reached 28.3 billion euros at the end of 2012 adjusted for some items — is a concern, a person familiar with the matter has said.
Telecom Italia shares sank as low as 54 cents last month, the lowest level since August 1997. They climbed 0.9 percent to 64 cents in Milan yesterday, valuing the company at 11.8 billion euros. Hutchison added 0.2 percent to HK$85.80 at 2:11 p.m. on the Hong Kong exchange.
Network Spinoff
Other panel members evaluating the possible linkup with Hutchison are Telefonica’s Julio Linares, Elio Cosimo Catania from Intesa Sanpaolo SpA, Gabriele Galateri from Assicurazioni Generali SpA (G) and independent director Luigi Zingales.
Italy’s former phone monopoly is divesting assets, cutting jobs and is reviewing a possible spinoff of its fixed-line telephone network in Italy, a move that could generate cash to reinvest in expanding coverage.
That project isn’t expected to be discussed at today’s meeting, two people said. Telecom Italia is considering a sale of an initial 30 percent stake in a new company to state lender Cassa Depositi e Prestiti, which may invest about 2 billion euros, people familiar with the matter said last month. Telecom Italia could also consider an initial public offering of the division in the future, another person said last month.
A group of directors appointed by Telecom Italia SpA to review a potential merger with Hutchison Whampoa Ltd. (13)’s local unit remain divided as the Italian company’s board gathers today, according to five people familiar with the matter.
Chief Executive Officer Franco Bernabe, who was asked last month to head a panel to explore a combination of Telecom Italia’s mobile-phone business with Hutchison’s 3 Italia, will brief the board on its findings today. Some members are skeptical about a deal because of differences in valuation for 3 Italia, the people said, asking not to be named because the discussions are private. Shareholder Telefonica SA (TEF) is concerned about potential losses in a transaction, two people said.
Bernabe is betting on a linkup with Hong Kong billionaire Li Ka-shing’s Hutchison to revive a stock that hit a 15-year low last month. Telecom Italia, scheduled to report earnings today, may say first-quarter revenue slumped 8 percent to 6.8 billion euros ($8.9 billion) as consumers cut spending on phone services, according to the average of seven analysts’ estimates complied by Bloomberg.
Valuation Gap
Telecom Italia is 22.4 percent owned by Telco SpA, whose investors include Telefonica, Assicurazioni Generali SpA, Intesa Sanpaolo SpA (ISP) and investment bank Mediobanca SpA. (MB) The shareholders have written down the value of their stakes several times and have considered using Hutchison’s possible entry as new shareholder to facilitate their exit, people familiar with the matter have said.
Complicating the discussion is the valuation of 3 Italia. While the division has a so-called fair value of 1.5 billion euros, the actual figure could differ widely because of accumulated losses amounting to as much as 8 billion euros and the lack of clarity of how much of that can be used to offset taxes, a person familiar with the matter said.
3 Italia had 2012 revenue of about 1.5 billion euros and earnings before interest, taxes, depreciation and amortization of about 90 million euros, another person said, adding that the numbers were restated to meet Italian accounting rules.
A merger would combine Italy’s biggest wireless carrier with the No. 4. Telecom Italia said April 11 that Hutchison wants to become a leading shareholder in the Italian company in any deal. Bernabe will need approval from Telecom Italia’s board to carry out due diligence and pursue formal negotiations with Hong Kong-based Hutchison.
Exploratory Nature’
Representatives for Milan-based Telecom Italia, Telefonica, Generali, Intesa and Mediobanca all declined to comment.
Hutchison reitereated today that “contacts between Telecom Italia SpA (TIT) and 3 Italia SpA on possible business combinations are still very preliminary and of an exploratory nature.”
For Hutchison, Asia’s biggest investor in European wireless networks, Telecom Italia’s high net debt — which reached 28.3 billion euros at the end of 2012 adjusted for some items — is a concern, a person familiar with the matter has said.
Telecom Italia shares sank as low as 54 cents last month, the lowest level since August 1997. They climbed 0.9 percent to 64 cents in Milan yesterday, valuing the company at 11.8 billion euros. Hutchison added 0.2 percent to HK$85.80 at 2:11 p.m. on the Hong Kong exchange.
Network Spinoff
Other panel members evaluating the possible linkup with Hutchison are Telefonica’s Julio Linares, Elio Cosimo Catania from Intesa Sanpaolo SpA, Gabriele Galateri from Assicurazioni Generali SpA (G) and independent director Luigi Zingales.
Italy’s former phone monopoly is divesting assets, cutting jobs and is reviewing a possible spinoff of its fixed-line telephone network in Italy, a move that could generate cash to reinvest in expanding coverage.
That project isn’t expected to be discussed at today’s meeting, two people said. Telecom Italia is considering a sale of an initial 30 percent stake in a new company to state lender Cassa Depositi e Prestiti, which may invest about 2 billion euros, people familiar with the matter said last month. Telecom Italia could also consider an initial public offering of the division in the future, another person said last month.
A group of directors appointed by Telecom Italia SpA to review a potential merger with Hutchison Whampoa Ltd. (13)’s local unit remain divided as the Italian company’s board gathers today, according to five people familiar with the matter.
Chief Executive Officer Franco Bernabe, who was asked last month to head a panel to explore a combination of Telecom Italia’s mobile-phone business with Hutchison’s 3 Italia, will brief the board on its findings today. Some members are skeptical about a deal because of differences in valuation for 3 Italia, the people said, asking not to be named because the discussions are private. Shareholder Telefonica SA (TEF) is concerned about potential losses in a transaction, two people said.
Bernabe is betting on a linkup with Hong Kong billionaire Li Ka-shing’s Hutchison to revive a stock that hit a 15-year low last month. Telecom Italia, scheduled to report earnings today, may say first-quarter revenue slumped 8 percent to 6.8 billion euros ($8.9 billion) as consumers cut spending on phone services, according to the average of seven analysts’ estimates complied by Bloomberg.
Valuation Gap
Telecom Italia is 22.4 percent owned by Telco SpA, whose investors include Telefonica, Assicurazioni Generali SpA, Intesa Sanpaolo SpA (ISP) and investment bank Mediobanca SpA. (MB) The shareholders have written down the value of their stakes several times and have considered using Hutchison’s possible entry as new shareholder to facilitate their exit, people familiar with the matter have said.
Complicating the discussion is the valuation of 3 Italia. While the division has a so-called fair value of 1.5 billion euros, the actual figure could differ widely because of accumulated losses amounting to as much as 8 billion euros and the lack of clarity of how much of that can be used to offset taxes, a person familiar with the matter said.
3 Italia had 2012 revenue of about 1.5 billion euros and earnings before interest, taxes, depreciation and amortization of about 90 million euros, another person said, adding that the numbers were restated to meet Italian accounting rules.
A merger would combine Italy’s biggest wireless carrier with the No. 4. Telecom Italia said April 11 that Hutchison wants to become a leading shareholder in the Italian company in any deal. Bernabe will need approval from Telecom Italia’s board to carry out due diligence and pursue formal negotiations with Hong Kong-based Hutchison.
Exploratory Nature’
Representatives for Milan-based Telecom Italia, Telefonica, Generali, Intesa and Mediobanca all declined to comment.
Hutchison reitereated today that “contacts between Telecom Italia SpA (TIT) and 3 Italia SpA on possible business combinations are still very preliminary and of an exploratory nature.”
For Hutchison, Asia’s biggest investor in European wireless networks, Telecom Italia’s high net debt — which reached 28.3 billion euros at the end of 2012 adjusted for some items — is a concern, a person familiar with the matter has said.
Telecom Italia shares sank as low as 54 cents last month, the lowest level since August 1997. They climbed 0.9 percent to 64 cents in Milan yesterday, valuing the company at 11.8 billion euros. Hutchison added 0.2 percent to HK$85.80 at 2:11 p.m. on the Hong Kong exchange.
Network Spinoff
Other panel members evaluating the possible linkup with Hutchison are Telefonica’s Julio Linares, Elio Cosimo Catania from Intesa Sanpaolo SpA, Gabriele Galateri from Assicurazioni Generali SpA (G) and independent director Luigi Zingales.
Italy’s former phone monopoly is divesting assets, cutting jobs and is reviewing a possible spinoff of its fixed-line telephone network in Italy, a move that could generate cash to reinvest in expanding coverage.
That project isn’t expected to be discussed at today’s meeting, two people said. Telecom Italia is considering a sale of an initial 30 percent stake in a new company to state lender Cassa Depositi e Prestiti, which may invest about 2 billion euros, people familiar with the matter said last month. Telecom Italia could also consider an initial public offering of the division in the future, another person said last month.
Source:Bloomberg
