Telefonica to make TI decision

19 Jan 2010

According to a report by Italian daily La Repubblica, Spanish telecoms group Telefonica will decide in the next three months whether it will conduct a full merger with Telecom Italia (TI) or part ways with the Italian incumbent. Telefonica is an indirect shareholder of TI with a 46.18% stake in Telco, a holding company that owns 22.5% of the Italian telecommunications operator. The group is reportedly unhappy with the performance of TI stock and Telefonica is considering whether the company could be improved by bringing it under its direct control. As reported by CommsUpdate on 29 October 2009, Telefonica only recently signed a pact to remain part of Telco until 2011, despite speculation that the telecoms giant was considering leaving the consortium to pursue a direct stake. Telefonica’s continued interest in Telco has limited TI’s international presence, particularly in Latin America, where antitrust issues have hampered operations. Following the Spanish operator’s decision to remain a shareholder in TI, the Italian firm has been placed under renewed pressure to sell its Argentinian holdings because of Telefonica’s investments in the same country.