Telecom Italia Weighs Asset Sales, Including Sparkle

(Bloomberg) -- Telecom Italia SpA is pressing ahead with a sale of its Sparkle undersea-cable unit and is looking at selling other parts of the business to boost its stock price, according to people familiar with the matter.

The board has approved a strategic review of Sparkle, said the people, who asked not to be identified because the deliberations are private. Chief Executive Officer Amos Genish said in March he was pitching the unit to potential buyers in early-stage talks. The move will free up cash that would help Telecom Italia to cut debt and restore dividend payments, they said.

U.S. activist investor Elliott Management Corp. has pushed for asset sales since wresting control of Telecom Italia’s board from top shareholder Vivendi SA. Speculation has focused on Sparkle, landline network division Netco, wireless towers unit Inwit SpA and Telecom Italia’s Brazilian arm -- its biggest business outside Italy.

A Rome-based Telecom Italia spokesman declined to comment on possible asset sales. Reporting earnings late on Tuesday, the company said the board was considering strategic options for its subsidiaries, without providing details, and was pressing ahead with the sale of media unit Persidera.

Telecom Italia shares rose 2 percent to 62 cents at 3:25 p.m. in Milan, giving the company a market value of 12.6 billion euros ($14.9 billion).

Vivendi declined to comment on the reports that Telecom Italia is planning asset sales beyond Sparkle. The French media conglomerate controlled by billionaire Vincent Bollore has said Telecom Italia’s share price performance has been disappointing since Elliott took control in early May with a call for better corporate governance.

Elliott has given its backing to incumbent CEO Genish -- a Vivendi appointee.

A Vivendi spokesman reiterated the company’s support for CEO Genish yet decried the situation at the Telecom Italia board as a “mess.” Vivendi is concerned about leaks to the press at the Italian carrier, the spokesman said.

The comment drew a quick rebuke from Telecom Italia’s Chairman Fulvio Conti.

“I am surprised and disappointed to read the unhelpful comments made by the Vivendi spokesman,” Conti said in a statement.

Bollore was planning to use Telecom Italia to create a southern European media group before Elliott moved for board control. The two shareholders are still at loggerheads, and Vivendi has even considered trying to win back control of the board, according to people familiar with the matter. Vivendi is keeping its options open about calling a shareholder meeting, the spokesman said.

Telecom Italia posted second-quarter results that were in line with analysts’ estimates.

”A challenging quarter for Telecom Italia with key financial metrics down in its home market,” Paolo Pescatore, an independent analyst, said in a note.

French telecom company Iliad SA, controlled by Xavier Niel, said this month that it gained 1 million mobile customers in Italy, a sign the billionaire’s entry in the country has gained early sales traction.

To contact the reporters on this story: Daniele Lepido in Milan at dlepido1@bloomberg.net;Angelina Rascouet in London at arascouet1@bloomberg.net

To contact the editors responsible for this story: Rebecca Penty at rpenty@bloomberg.net, Thomas Pfeiffer, Phil Serafino

©2018 Bloomberg L.P.