NEWS

Telecom Italia explores network separation, talks to Mediaset

Wednesday, Dec 06, 2017

Telecom Italia (TIM), whose top shareholder is France's Vivendi, said on Tuesday it would look into whether a separation of its fixed line network was needed to address competition concerns from Italian authorities.

Italy's biggest phone group will also pursue talks with Mediaset on a new content deal, a move sources say could help settle a bitter dispute between Vivendi and the broadcaster owned by former Prime Minister Silvio Berlusconi.

TIM is under pressure from Italian politicians, regulators and rival firms to separate and upgrade its network, an asset analysts have valued at up to 15 billion euros ($17.7 billion).

The pressure has intensified since Vivendi, which has a 24 percent stake in TIM, began to exert greater influence, raising concerns within the Italian government.

"Over the coming months, the management will continue to examine various hypothesis to establish whether network separation is needed to address institutions' input and to unlock value," TIM said in a statement after a board meeting.

According to a person familiar with board proceedings, newly appointed Chief Executive Amos Genish would make his recommendation on whether to separate the network at a later stage, probably at the next board meeting in March when a 2018-2020 business plan will be presented.

Genish said last month TIM wanted to keep control of the network, TIM's most prized asset, but didn't need to own it in full, adding the company would make a decision "on our terms when we really believe it's needed".

Two sources close to the matter said TIM was trying to buy time, with one saying it was unlikely to make any decisions on the network before national elections due by May 2018 which are expected to yield a government change.

"It would make sense to separate the network and list it, because it would create value, but TIM doesn't intend to make any significant announcements before the vote," one of the sources said.

TIM has come under closer scrutiny by Rome, especially since Vivendi began calling the shots at the Italian company and appointed some of its own top executives as CEO and chairman.

The government eventually activated special powers to protect TIM as a strategic asset to rein in Vivendi's influence. But the centre-left government's hand is weakened by the prospect of a likely defeat at next year's vote, according to the latest opinion polls.

The multi-year content talks with Mediaset would include movies, TV series and sport news, TIM said.

They come as Vivendi is trying to settle a legal dispute with Mediaset, whose owner Berlusconi's centre-right coalition is riding high in opinion polls ahead of the election, over a soured pay-TV deal.

Sources have said Vivendi is keen to strike a deal with Mediaset before a first court hearing on the matter on Dec. 19.

A source close to the matter said a recently launched joint venture between TIM and Vivendi's pay-TV arm Canal+ was "at the heart of the deal discussed (by Vivendi) with Mediaset".

Analysts have said such a content deal would guarantee steady revenues at Mediaset's pay-TV arm Premium, which Vivendi agreed to buy last year before backtracking on the purchase.

 

Source: telecom.economictimes.indiatimes.com

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