Telecom Italia rubbishes restructuring rumours

22 Nov 2004

Telecom Italia (TI) has dismissed as ‘mere rumour and speculation’ suggestions that it is planning to merge with its separately listed Telecom Italia Mobile unit, adding that no third parties have been approached to either plan a transaction or explore a possible merger deal. The Italian company’s announcement comes in the wake of a heavy period of trading in TI shares and in stock related to companies linked to the telco via a series of complex cross-shareholdings. Investors had seemingly been anticipating a bid by Marco Tronchetti Provera, the tycoon who leads TI and other companies linked to it, to consolidate Telecom Italia Mobile into TI. Telecom Italia owns 56% of TIM through a complex mesh of associations involving the tyre company Pirelli and investment group Olimpia. Speculation over a possible TIM merger deal was sparked earlier this month when Pirelli said it was to sell its two cable-making units and invest the proceeds in existing businesses.

In a separate story, TI has been fined EUR152 million (USD196 million) by the Italian regulator for hampering competition in the country’s business telecoms market. Italy’s competition authority, the AGCM, says that the operator has ‘abused its dominant position’ in the fixed line market for telecoms services by employing clauses in its contracts ‘rendering it more difficult or precluding all possibility of rival operators offering telecoms services’. Telecom Italia plans to appeal the fine, saying it has acted properly, pointing to a recent programme designed to lower rivals’ access costs and open up its customer base to examination.