Telecom Italia SpA, which has had seven years of falling sales in its home market, is considering buying a stake in network owner Metroweb Italia to boost its broadband service, three people familiar with the matter said.
Italy’s largest carrier may initially seek a holding of under 50 percent for as much as 300 million euros ($413 million) to avoid potential antitrust hurdles, said one of the people, asking not to be named because the deliberations are confidential. A potential seller could be F2i SGR SpA, which owns 54 percent of Metroweb Italia, two of the people said.
The discussions are at an early stage and may not result in a transaction, the people said. Metroweb Italia’s shareholders also include state-backed Fondo Strategico Italiano.
Metroweb Italia controls Milan area fiber-optic network operator Metroweb SpA, an asset that would let Telecom Italia strengthen its broadband service as it competes against Fastweb SpA and VimpelCom Ltd.’s Wind SpA unit. Chief Executive Officer Marco Patuano, who took the helm at Milan-based Telecom Italia in October, is working to upgrade networks in Italy and Brazil while trying to cut debt.
Representatives for Telecom Italia, F2i and Metroweb declined to comment.
“Such an acquisition would definitely help Telecom Italia improve coverage and performance of their fibre-optic footprint,” said Luca Schiavoni, a telecommunications analyst at Ovum who specializes in regulations. “If such a move goes ahead, Telecom Italia may want to increase its stake in the company in the future to unlock the full potential.”
Telecom Italia’s domestic revenue declined every year since 2007, to 16.2 billion euros last year from 25.8 billion euros in 2006, according to data compiled by Bloomberg. Landline sales shrank by about 1 billion euros last year, according to a company presentation.
Telecom Italia shares fell 0.7 percent to 82.5 cents at 4:59 p.m. in Milan. They have advanced about 14 percent this year, after ending a string of eight straight annual declines in 2013.