France Télécom all set to exit Italian telecoms market

20 Mar 2003

Italian electricity company Enel has announced plans to increase its holding in Italian telco Wind to 100%, through the acquisition of the 26.7% stake held by its joint venture partner, France Télécom (FT) [NYSE:FTE]. Enel expects to pay around EUR1.5 billion (USD1.59 billion) for the stake; a year ago former FT chairman Michel Bon had expected to sell it for between EUR3 billion and EUR5 billion reflecting the steep plunge in the value of mobile stocks in the last twelve months. FT, which will end its six-year involvement in the Italian telecoms market when it sells the stake, plans to use the funds from the sale to reduce its EUR68 billion of debt. The purchase will release Enel from a commitment made to the French telco to float part of Wind this year, although the Italian company has said it plans to concentrate on its core utilities business and will still go ahead with an IPO of around 25% of the cellco when the state of the market improves.

Wind is the only telco in Italy to offer both fixed line and mobile services and is the second largest operator in terms of subscribers. At the end of 2002 it had a total customer base of 26.9 million, including 8.1 million cellular subscribers, 7.3 million fixed line customers and 11.5 million internet users.