Telecom Italia’s directors on Friday gave the go-ahead for the company to explore its options regarding monetising its tower assets, after a board meeting in Brazil set up to discuss the telco’s ongoing strategy at its Latin American operations.
The board charged Telecom Italia CEO Marco Patuano with looking into ways to extract value from Infrastrutture Wireless Italiane (INWIT), the towers business spun off from Telecom Italia this summer.
The annou ncement came after Telecom Italia last week admitted that it has seen strong interest in the business, but said it was keeping its options open.
The Italian incumbent did not provide further information about any interested parties. However, recent rumours that Telecom Italia was holding talks with Spain’s Cellnex about the possible acquisition of a stake in INWIT were roundly denied by both companies.
Friday’s board meeting also addressed the future of Telecom Italia’s operations in Argentina and Brazil. In a statement, the telco said its directors had confirmed the strategic nature of the South American region to the business, an assertion that always increases M&A speculation rather than quelling it.
The operator has already brokered a deal to sell out of Argentina.
It agreed to sell a 68% stake in Sofora – the holding company that controls Telecom Argentina – plus shares held by various Telecom Italia subsidiaries to Fintech in a deal worth US$960 million in November 2013. However, the pair were unable to close the deal and just under a year ago they renegotiated the terms – retaining the overall purchase price – to allow for a lengthy regulatory approval process.
Last week Telecom Argentina CEO Elisabetta Ripa reaffirmed Telecom Italia’s commitment to Argentina until the completion of the Fintech deal, including a 5.5 billion pesos (€522 million) investment plan designed to boost the operator’s mobile network and its positioning in the market.
The future of Telecom Italia’s Brazilian business is more uncertain, the telco having been at the centre of consolidation talk for a number of years. And Friday’s board meeting did not provide much clarity.
The telco’s directors discussed the difficult macro-economic situation in Brazil and the devaluation of the currency against the euro, as well as TIM Brasil’s performance, confirmi ng the announcement made in early 2015 that Telecom Italia plans to invest 14 billion reais in the country over the three-year period from 2015 to 2017. To illustrate in part the issues the telco is facing in Brazil, that investment plan was worth around €4 billion when it was announced in February, but the current exchange rate now puts it at €3.15 billion.
"The future economic scenarios and prospects of the group in such a strategic country, where Telecom Italia aims to consolidate its long-term presence, were then analysed," the telco said.
That final comment suggests reports of possible merger and acquisition activity in Brazil are unlikely to disappear any time soon.
