Telecom Italia Owners Said to Gather Amid Hutchison Talks

Telecom Italia SpA (TIT)’s largest shareholders gathered in Milan today ahead of a crucial board meeting whose focus will be on a potential link-up with Hutchison Whampoa Ltd. (13), two people with knowledge of the matter said.

Telefonica SA (TEF), Intesa Sanpaolo SpA (ISP), Assicurazioni Generali SpA (G) and Mediobanca SpA (MB), which together own 22.4 percent of Telecom Italia through holding company Telco SpA, are receptive to the idea of letting the carrier explore a possible combination of its Italian business with Hutchison’s H3G, said one of the people, asking not to be identified because the deliberations are confidential. Board members also plan to discuss a proposed spinoff of Telecom Italia’s fixed-line phone network, another person said.

Italy’s largest phone company said last week it had preliminary contacts with Hong Kong billionaire Li Ka-shing’s Hutchison about a potential business combination, giving investors a chance to exit. Telecom Italia’s stock has gained 12 percent since Bloomberg News reported last week the scheduled board meeting. Still the shares are down 12 percent this year, cutting the Milan-based carrier’s value to 11.3 billion euros ($14.8 billion).

Shareholder Exit?

“Shareholders have lost a lot of money and I expect they would be willing to cut their stakes at a decent price, avoiding further losses,” said Wolfram Mrowetz, chairman of Alisei Sim, a Milan-based brokerage. “Today’s meeting is the occasion to discuss investors’ move ahead of the board meeting.

Officials at Assicurazioni Generali and Mediobanca declined to comment. A representative of Intesa Sanpaolo wasn’t able to offer an immediate comment and an official at Telefonica wasn’t available.

Telecom Italia, led by Chief Executive Officer Franco Bernabe (BNBC), rose 1 percent to close at 60.2 cents in Milan. Telefonica added 2.9 percent to 10.80 euros.

The company’s board plans to evaluate the Hutchison proposal tomorrow, it said in an April 9 statement. Hutchison may want as much as 29.9 percent of Telecom Italia at no more than 1.20 euros a share, Il Messaggero reported yesterday, without citing anyone.

Telefonica, which indirectly holds a 10.5 percent stake in Telecom Italia, is willing to exit its six-year investment in the Italian company, two people familiar with matter said yesterday. No decision has been made and Madrid-based Telefonica would be reluctant to do a deal in which it would take further losses, people said.

To contact the reporters on this story: Sonia Sirletti in Milan at ssirletti@bloomberg.net; Manuel Baigorri in Madrid at mbaigorri@bloomberg.net; Daniele Lepido in Milan at dlepido1@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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