June 17, 2015 / 8:54 AM / 3 years ago

Telecom Italia shares rise on report Vivendi to lift stake

MILAN (Reuters) - Shares in Telecom Italia rose sharply on Wednesday on the prospect of French media group Vivendi cementing its influence over Italy’s biggest phone group once its current big shareholders exit.

People walk past a Telecom Italia phone booth in Rome August 28, 2014. REUTERS/Max Ross

Vivendi is on track to become Telecom Italia’s largest shareholder when it receives an 8.3 percent stake as part-payment for selling Brazilian broadband group GVT to Spanish carrier Telefonica.

Citing people familiar with the matter, Reuters reported on Tuesday the French group planned to lift its stake to 10-15 percent, as Telefonica and three Italian financial institutions dissolve the investment vehicle through which they controlled Telecom Italia since 2007.

By 0435 ET, Telecom Italia shares had increased 3.6 percent to 1.145 euros, their highest level in three days, outperforming a 0.6 percent gain in the European telecoms index.

In Paris, Vivendi shares were up 1.8 pct making them biggest gainer on the CAC 40 index, which was down 0.2 per cent.

The arrival of Vivendi heralds a new era for the former Italian state monopoly when the media and telecoms industry is fast consolidating. It also comes as the Italian government is pressuring to Telecom Italia to invest more on its network to help revive the country’s ailing economy.

In a note on Wednesday, Kepler analyst Enrico Coco reiterated a “buy” rating on the stock saying the company had “structural competitive advantages as a convergent player” and was likely to benefit from mobile market consolidation in Italy.

Analysts at Kepler Securities saw the logic of an increased Vivendi stake.

“Vivendi is still full of cash, the Italian telco market is about to consolidate with TI in a strategic position, a content distribution opportunity could arise, and Vivendi should be able to influence the board decisively with its stake,” they said.

Telecom Italia CEO Marco Patuano, named in 2013 by the outgoing investors, is selling assets and halting dividend payments to shift back to investments and return the company’s domestic business to growth.

Key issues facing the Italian company are whether to sell its Brazilian mobile phone unit TIM Participacoes and eventually take part in a European consolidation of the sector. France’s Orange and Germany’s Deutsche Telekom have also shown interest in buying Telecom Italia, sector bankers and company executives have said.

Reporting by Danilo Masoni in Milan and Leila Abboud in Paris; Editing by Keith Weir

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