Telecom Italia to separate fixed-line network business

31 May 2013 |

Following a month of speculation, Telecom Italia has agreed to spin-off its fixed-line network as it also considers plans to potentially merge its mobile operations with Hutchison Whampoa.

The Telecom Italia board yesterday voted in favour of creating a separate company to operate the copper and fibre network. It is thought the company would initially be wholly controlled by Telecom Italia.

According to analysts, the new company could have an enterprise value of up to €14 billion. The move is still subject to approval by regulator Agcom.

The separation of the fixed-line network paves the way for the state-backed fund, Cassa Depositi e Prestiti, to potentially acquire a stake in the business, which could help Telecom Italia tackle mounting debt.

At the same time, the move could also pave the way for a possible merger between Hong Kong-based Hutchison and Telecom Italia’s mobile unit.

It is thought that Italian politicians had previously held concerns over a foreign company potentially owning the country’s fixed-line telecoms network, which is considered a strategic national asset.

The deal, however, is subject to Hutchison buying an additional stake in Telecom Italia to become the leading shareholder of the company. The Telecom Italia board is said to have established a special committee to examine a proposal from Hutchinson.