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Telecom Italia ownership battle over

30 Apr 2007

Spanish giant Telefónica and a group of Italian financial companies have agreed to pay EUR4.1 billion (USD5.6 billion) for a controlling 18% stake in Telecom Italia (TI), drawing to a close the long-running battle over ownership of the operator. Under the terms of the deal, the new shareholders will form a company known as Telco, which will own 23.6% of TI after combining the 18% stake in the Italian firm previously held by Olimpia with 5.6% of shares already held by the Italian partners. Telefónica will hold 42.3% of Telco (and hence 10% of TI) and will have two board seats at Telecom Italia, while the Italian partners – which include buyers include Italy’s largest retail bank, Intesa Sanpaolo, merchant bank Mediobanca, insurer Assicurazioni Generali, and the Benetton family – will hold 13 seats.

The Madrid-based company said that it plans to invest EUR2.3 billion in the new company, and that the agreement gives it a foothold in Italy and strengthens its presence Brazil. According to TeleGeography’s GlobalComms database, Telecom Italia’s mobile division, TIM, had a 25.2% share of the Brazilian mobile market at the end of 2006, while Telefónica – via its 50% stake in Vivo – the Brazilian market leader with a 28.8% market share. The official line is that management of Vivo and TIM is to remain independent of one another, though in some quarters of the telecoms press speculation is mounting that Telefónica would like to merge Vivo with TIM Brasil.

Italy, Telecom Italia (TIM), Telefonica

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