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Telecom Italia Said to Hire Morgan Stanley for Grid Spinoff

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Dec. 17 (Bloomberg) -- Telecom Italia SpA hired Morgan Stanley for advice on spinning off its fixed-line network as the former phone monopoly seeks to raise capital, according to people familiar with the situation.

The investment bank has been told to lead talks with state lender Cassa Depositi e Prestiti SpA, which may take a stake in the network, one person said. Discussions are at an early stage, said another one of the people, who asked not to be identified discussing a private matter.

Telecom Italia is seeking a separation of fixed and mobile networks that would be unprecedented among Europe’s formerly government-owned phone operators amid strict regulation and stagnant revenue. Earlier this month, its board authorized executives to begin negotiations with Cassa Depositi e Prestiti.

Mary Claire Delaney, a spokeswoman for New York-based Morgan Stanley, declined to comment. Francesca Valagussa, a spokeswoman for Telecom Italia, didn’t immediately return a message seeking comment.

A split may soften regulatory scrutiny of Milan-based Telecom Italia while allowing it to focus on faster-growing mobile data services. The operator owes creditors 30 billion euros ($39.5 billion), more than its market value. In November the company reported its second straight quarter of falling sales and a 13 percent decline in profit.

As the owner of Italy’s fixed-line backbone, Telecom Italia must currently inform regulators 30 days ahead of any changes to broadband offers so the watchdog can assess whether rivals can match their terms. As a legally separate company, it could avoid that burden, though the firm has said it will seek to retain a majority stake in the fixed-line network.

Telecom Italia dropped 1.2 percent to 69.75 cents in Milan trading as of 9:55 a.m. The stock had declined 15 percent this year through Dec. 14, while the 23-member Bloomberg Europe 500 Telecom Services Index dropped 9.7 percent.

To contact the reporter on this story: Matthew Campbell in London at; Serena Saitto in New York at

To contact the editor responsible for this story: Kenneth Wong at