Reuters: Global Markets: Telecom Italia jumps on network spin-off hopes

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Telecom Italia jumps on network spin-off hopes Jun 19th 2012, 14:14 By Stefano Rebaudo MILAN | Tue Jun 19, 2012 10:14am EDT MILAN (Reuters) - Telecom Italia (TLIT.MI) shares jumped 7 percent on Tuesday amid speculation it will hold talks with state-backed financing body CDP about spinning off its fixed-line network, as the country moves to improve its broadband access. Earlier, Italy's Il Sole 24 Ore newspaper reported Italy's largest telecoms company was planning to spin off its 15-billion-euro fixed-line network and Cassa Depositi e Prestiti (CDP) could inject 3 billion into the separated company. Telecom Italia and CDP both denied the report. However, one source close to the matter told Reuters the time was right to start serious talks about the network. "The time is right. Certainly the price must be negotiated," the source said. "The key issue is the valuation of the network, which analysts indicate in a wide range which tops 15 billion euros," an industry source added. Telecom Italia shares extended their gains after the sources' comments. At 1005 EDT, the stock was up 7 percent at 0.72 euros, the biggest rise by a blue-chip European company. Italy lags Europe in terms of broadband penetration with only 49 percent of households connected against a European average of 61 percent, according to Eurostat data. The sources said Telecom Italia could spin off its Open Access unit, which has the network infrastructure and employs a 19,000 people in maintenance operations, and then merge it into a vehicle company open to other investors. CDP could invest in the vehicle, as well as other carriers like mobile phone companies Vodafone Italia (VOD.L) and Wind, and broadband provider Fastweb, a unit of Swisscom (SCMN.VX). CDP and Telecom Italia have long been talking about ways to boost broadband access. Earlier in June, CDP chairman Franco Bassanini said it was ready to help Telecom Italia fund its next generation broadband network. In response, Telecom Italia Chief Executive Marco Patuano said the group was open to working with CDP on progressively rolling out an ultra-broadband network in Italy. Telecom Italia Chairman Franco Bernabe has repeatedly said the group planned to retain control of its fixed-line network, which could still be the case with a demerger. CDP has already agreed to inject up to 500 million euros in a rival broadband project by Metroweb to bring fiber access to homes in Italy's 30 most important cities. Traders said a spin-off could trigger a rally Telecom Italia's shares, which earlier this month hit their lowest level in almost 15 years. (Additional reporting by Stefano Bernabei in Rome; Editing by Mark Potter) Link this Share this Digg this Email Reprints

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