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UPDATE 2-Telecom Italia chairman keeps open mind about possible network spin-off
October 5, 2017 / 10:05 AM / 2 months ago

UPDATE 2-Telecom Italia chairman keeps open mind about possible network spin-off

(Adds statement from TIM spokesman in paragraph 11)

By Agnieszka Flak

CAPRI, Italy, Oct 5 (Reuters) - Telecom Italia (TIM) chairman Arnaud de Puyfontaine is keeping an open mind about possibly separating its fixed-line network, he said on Thursday, a move favoured by some Italian government officials.

The strategy of Italy’s biggest phone group has become a hot topic among investors after French media company Vivendi , TIM’s largest shareholder, tightened its grip on the firm and appointed one of its top executives as TIM’s CEO.

Politicians in Rome have also become increasingly concerned about Vivendi’s influence over TIM, which is considered a strategic company.

De Puyfontaine, who is also Vivendi’s CEO, became TIM’s executive chairman earlier this year, while last month Vivendi’s former chief convergence officer, Amos Genish, became TIM’s CEO.

“I have no preconception on anything as regards to TIM or what we will do and how we will build the success of the company,” de Puyfontaine told journalists, when asked whether the company would consider a spin-off of the network.

“I am very pragmatic ... I just want to make TIM, as an incumbent, a company that is going to make the success and the pride of Italy, its government and its customers,” he said on the sidelines of a conference on the island of Capri.

Italian politicians have been calling on and off since 2006 for TIM’s network to be transferred to a state-controlled entity as Rome considers it a strategic asset that should be a neutral platform open to all phone companies.

The heavily-indebted company has also been criticised for putting off costly upgrades to its ageing copper network to provide faster internet connections and is now facing competition from Open Fiber, owned by state-controlled utility Enel and state-owned lender Cassa Depositi e Prestiti (CDP).

Plans to transfer TIM’s network, which according to some estimates could be worth up to 15 billion euros ($18 billion), have foundered in the past over its valuation and because TIM insisted on hanging onto the business.

However, the idea is gaining traction once again with a view to fostering cooperation to allow a speedy roll-out of an ultra-fast broadband network across Italy.

A TIM spokesman reiterated on Thursday that the network remained a strategic asset for the group and there were no plans to sell or spin it off.

De Puyfontaine said he was preparing with Genish a new strategy for the company.

“We will be able to be more precise soon,” he said.

Genish is TIM’s third CEO in less than two years, leaving investors guessing about Vivendi’s ultimate aim for the company: Use it as a pillar of its plan to create a southern European media empire or as an asset to trade in the next wave of mergers in European telecoms.

Some fund investors expect Genish to spin off the fixed-line network, and perhaps sell TIM’s Brazilian business before, ultimately, merging the remaining business with a bigger European rival.

TIM shares were up 1.9 percent at 0933 GMT, within a European telecommunications index up 0.4 percent. (Editing by Mark Potter and Jane Merriman)

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