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Telecom Italia's network should be spun off and listed - minister
October 20, 2017 / 11:05 AM / 2 months ago

Telecom Italia's network should be spun off and listed - minister

ROME (Reuters) - Italian Industry Minister Carlo Calenda said on Friday that Telecom Italia’s (TIM) (TLIT.MI) fixed-line network should be spun off from the rest of the company and listed.

FILE PHOTO: A Telecom Italia tower is pictured in Rome, Italy, March 22, 2016. REUTERS/Stefano Rellandini/File Photo

Italian politicians have been calling off and on 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 network issue returned to the forefront of political debate when French media group Vivendi (VIV.PA) built a 24 percent stake in TIM, becoming its top investor and increasingly calling the shots at Italy’s biggest phone group.

“Yes, yes, (the network) should be separated and put on the stock market ... that way the market can make its judgement,” Calenda said in an interview with Repubblica TV when asked if he favoured such a scenario for the company.

Adding to recent signals that Rome feels uncomfortable with Vivendi’s growing influence over Telecom Italia, Calenda said it was fine for the company to have international investors, but “they can forget about treating us like a colony.”

Shares in TIM were up 1.9 percent by 1205 GMT, outperforming a 0.4 percent rise in the European telecoms index .SXKP.

The heavily-indebted TIM has been criticised for putting off costly upgrades to its ageing network and is now facing competition from broadband group Open Fiber, jointly controlled by utility Enel (ENEI.MI) and state lender CDP.

Plans to spin off TIM’s network, which according to some estimates could be worth up to 15 billion euros (£13.4 billion), have foundered in the past over its valuation and TIM’s insistence on hanging on to the business.

In the absence of an immediate spin-off, the network could be separated into a regulated newco, fully controlled by TIM but legally distinct, politicians have said in recent weeks, adding that such a move could facilitate a later integration with Open Fiber.

    The option of CDP investing in TIM or directly in the network has also been discussed, although Calenda said on Friday a role for CDP was “not necessary”.

    Italy’s communications regulator is already considering whether it can force TIM to separate the network, sources close to the matter told Reuters, as happened to British counterpart BT (BT.L) and its network unit Openreach.

    Calenda has also sent the regulator a letter asking it to judge whether a “more neutral model” for the network could be in the interests of the country.

    Friday’s comments came a day after the minister said he expected a “more constructive and productive” phase of relations with TIM following a meeting with the phone group’s new CEO Amos Genish.

    Earlier this week, Italy told TIM that it wants to have a say in all its decisions regarding assets of national interest, in the strongest sign yet that Rome intends to rein in Vivendi’s growing influence over the former state monopoly.

    Reporting by Gavin Jones, writing by Agnieszka Flak; Editing by Adrian Croft

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