Two maverick players in the mobile operator world could both bid for stakes in Telecom Italia, as it once again seems probable that TI will be the first major European national incumbent to break apart. Sol Trujillo, former CEO of Australia’s Telstra, is reportedly in talks with investors about a possible $9.6bn bid for a stake in TI, which would also see him take the CEO role. Meanwhile, Egyptian telecoms investor Naguib Sawiris may be interested in re-entering the Italian market via a stake in TI, having exited when he sold his Wind business to VimpelCom.
According to recent Bloomberg reports, Trujillo has been talking to US and Middle Eastern financiers about a possible bid for TI, which would be worth about half of the operator’s market value. As of the end of June, the carrier had $35bn in net debt. It has had a tumultuous time in recent years because of its debt levels, the southern European recession, and a troubled relationship with its largest shareholder, Telefonica, which is now preparing to cut its ties with the Italian player.
And in Latin America, it lost out to Telefonica in the bidding war for Brazilian fixed-line player GVT, and has faced delays to the sale of its Argentinian operation, which is part of a €4bn asset sale program. CEO Marco Patuano has also acknowledged that TI could sell its TIM Brasil unit in the wake of the GVT setback, but the price would have to be high, since he still regards that business as a strategic asset in a high growth territory.
Indeed, Sawiris told Reuters that, while he was still interested in TI – with which he has had periodic talks over the years – it would have to have its Brazilian subsidiary still on-board. He said the operator needs a capital increase, and he would be willing to support that.
Sawiris made an unsuccessful bid for TI in 2012 and in April this year he said he would be ready to invest up to €2bn in the telco, provided that Telefonica ceased to be a shareholder, which he believed to be a conflict of interest because the two European operators compete in Brazil. That obstacle will be removed since Telefonica is exiting TI as part of its purchase of GVT from Vivendi.
In the first half of this year, TI saw revenues down by 11.3% year-on-year to €10.55bn ($13.4bn), while earnings before non-cash goodwill charges were down 3.9% to €2.23bn ($2.8bn).