Telecom Italia’s Sawiris Stake Sale Seen Boosting Value

Telecom Italia SpA’s second-biggest shareholder says he would welcome an investment by Egyptian billionaire Naguib Sawiris in the phone company as it may create value and boost the stock price.

“Any industrial or sector investor who can help to unlock the real value of Telecom Italia would be a welcome addition,” Marco Fossati, whose family’s Findim Group SA owns about 5 percent of Telecom Italia, said in a phone interview yesterday. “Sawiris is an expert in the telecommunications industry with an incredible track record in creating shareholder value through both organic and creative M&A activities.”

Italy’s former phone monopoly said Nov. 12 that Sawiris expressed an interest in acquiring new shares in the company. Sawiris made his first major venture into Italy in 2005, when he bought Wind Telecomunicazioni SpA, the country’s third-largest mobile-phone provider.

With an investor like Sawiris, Milan-based Telecom Italia “could benefit across all geographies including Brazil,” Fossati said. “He’s an expert in acquiring needed assets and, unlike Telefonica, he will have no conflicts of interest when doing so.”

A sale of new shares would dilute the stakes held by Telefonica SA, Assicurazioni Generali SpA, Mediobanca SpA and Intesa Sanpaolo SpA, which together own about 22 percent of Telecom Italia through holding company Telco SpA.

‘Constructive Debate’

Telefonica, Spain’s biggest phone company, and Telecom Italia compete in South American countries such as Brazil, where they control the top mobile carriers by subscribers, and Argentina.

Telecom Italia may look at Vivendi SA’s Brazilian phone operator GVT as the French company considers options for the asset, Chief Operating Officer Marco Patuano said yesterday.

“We’re happy to work with anyone who has strong strategic and industrial projects to help create value,” Fossati said. This type of investor could help re-balance the board with more industry experts, prompting “a more constructive debate and confrontation with management within the board, which currently appears to be hostage to Telefonica.”

Telecom Italia has lost about two-thirds of its value since November 2007, when Findim said it had a 2 percent. The shares added 0.3 percent to 72.4 cents as of 9:53 a.m. in Milan, giving the carrier a market value of 13.5 billion euros ($17.1 billion).

Any capital increase should reflect “the true underlining value” of Telecom Italia and not the current “depressed” price, Fossati said.

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