* CEO says Brazil will generate value in coming years
* CEO says nobody has suggested TIM losing control of fixed-line
* Q3 group EBITDA down 2.5 pct, revenues up 1.3 pct
* Non-recurring charges of 127 mln euros larger than expected (Recasts after conference call, adds details, updates shares)
By Agnieszka Flak
MILAN, Nov 10 (Reuters) - Telecom Italia’s (TIM) new boss poured cold water on Friday on speculation of a potential sale of the phone group’s Brazilian business, as investors await his strategic plan due in February next year.
Since being appointed as chief executive last month, speculation has been rife about the options Amos Genish, a protege of TIM’s top shareholder Vivendi, might pursue.
TIM Participações, Brazil’s second-largest wireless phone company, has often been cited as a possible candidate for sale, especially as it would help bring down TIM’s debt pile of 26 billion euros ($30 billion).
“We see TIM Brasil as a core asset, strategic asset for the company,” Genish said on Friday after the group’s third-quarter results fell short of forecasts. “It’s part of our strategic perimeters, and we see it as that going forward. A lot of value could be created in TIM Brasil in the coming years. The economy in Brazil is turning around.”
Earlier this week the Brazilian business delivered better than expected quarterly earnings.
The former Israeli army captain and veteran telecoms dealmaker said on Friday he was open to exploring options regarding the group’s telecoms masts business INWIT, which TIM controls with a 60 percent stake.
“We are open to any potential possibility with respect to that asset as long as it preserves our strategic influence,” Genish told analysts after the results.
He said discussions with the authorities regarding ensuring fair access to the group’s main fixed-line network were “constructive and positive”, and it was too early to discuss any potential separation or listing of that business.
Italian politicians have been calling for TIM’s network - which according to some estimates could be worth up to 15 billion euros - to be transferred to a state-controlled entity as a neutral platform open to all phone companies.
Genish said that whatever the outcome of the discussions, nobody had suggested TIM losing control of the fixed-line business.
TIM’s third-quarter results fell short of forecasts, dragged lower by litigation costs and severance payments in a tumultuous year for the former state monopoly. The shares closed down 1.7 percent.
TIM lost its CEO in July as top shareholder Vivendi tightened its grip on the company. Then last month Italy’s government, alarmed at the French company’s growing influence, activated a “golden power” to have a say in TIM’s strategic decisions.
The ousted CEO had made it a priority to revive growth in Italy, but on Friday the company said Italian sales growth slowed to less than 1 percent in the third quarter from 4 percent in the second. Profits in Italy fell 6 percent.
Rival investments in broadband infrastructure by power firm Enel have been undermining TIM’s broadband drive and the imminent arrival of low-cost French mobile challenger Iliad is also likely to squeeze profits further.
However, Genish said he expected the mobile average revenue per user (ARPU) - a key financial indicator - to remain strong.
He also sees great potential for growth in the pay-TV market in Italy, adding TIM’s joint venture with Vivendi’s pay-TV unit Canal+ had attracted lots of interest from potential partners.
Earnings before interest, tax, depreciation and amortisation (EBITDA) fell 2.5 percent to 2.1 billion euros ($2.4 billion) during the period. One-off charges of 127 million euros for litigation, regulatory and severance items included a 25 million-euro leaving package for the former CEO.
Additional reporting by Stephen Jewkes and Danilo Masoni; editing by Tom Pfeiffer and Elaine Hardcastle