Monday, September 24, 2012

Telecom Italia Network Sale?

Telecom Italia SpA should sell its fixed-lined network, said Marco Fossati, whose family’s Findim Group SA owns about five percent of the company. 

“This opportunity should not be wasted as the right conditions may be now, in the next two or three months, or never.”

To be sure, the interests of major shareholders and end users or Telecom Italia do not always line up in the same way. Telecom Italia, like other European telcos, needs to reduce its debt load and make investments in newer lines of business. 

One can argue that what is good for Telecom Italia as an asset, and what is good for Italy, Italian consumers or Telecom Italia as a going concern, can be different. 

In a larger sense, there is a small but growing divergence of opinion among tier one service providers about the value of network asset ownership. 

In some cases, service providers have concluded that they can live with a future as non-facilities-based providers, or have traded their facilities ownership for other opportunities. That is the case in Australia, New Zealand, Singapore and Malaysiafor example. 

In a broader range of cases service providers have concluded they can do so out of region, while continuing to operate as facilities-based providers in region. Increasingly, there is understanding that specific elements of the network can safely be outsourced or shared. 

Telecom Italia might ultimately look for some way to bring in other investors, which would raise liquidity, while retaining management control of the network, though. 

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