Cellnex Said to Consider Bid for Telecom Italia's Tower Unit

  • One scenario discussed is purchase of 30% stake: people say
  • Inwit shares increase as much as 9.7% on Milan exchange

Cellnex Telecom SAU is considering an offer for a stake in Telecom Italia SpA’s mobile-phone tower business to bolster the Spanish company’s own network of transmission facilities, according to people familiar with the matter.

Executives from both sides have held meetings in recent weeks and one scenario discussed was a purchase of a stake of about 30 percent in Milan-based Inwit SpA, said the people, who asked not to be identified because the talks are private. The discussions are at an early stage, the size of the stake may change and Cellnex, which was spun off by Abertis Infraestructuras SA earlier this year, may decide not to proceed with a deal, the people said.

Inwit shares jumped as much as 9.7 percent, trading at 4.42 euros at 5:19 p.m. in Milan and valuing a 30 percent holding at 795 million euros ($900 million). Cellnex added 0.5 percent in Madrid. Both stocks have risen since their businesses were separated from their parent companies.

As mobile-phone service providers seek to improve profitability, some have chosen not to own a network, instead relying on tower companies such as Inwit and Cellnex to provide transmission capacities.

Representatives for Barcelona-based Cellnex and Milan-based Telecom Italia declined to comment. Il Sole 24 Ore reported on Tuesday that Telecom Italia may reduce its 60 percent holding in Inwit.

Cellnex calls itself Europe’s biggest independent mobile-tower operator, with some 15,000 towers in Spain and Italy, including 7,300 towers that Abertis acquired from VimpelCom Ltd.’s Italian unit before Cellnex’s IPO. Chief Financial Officer Jose Manuel Aisa Mancho told investors on Aug. 4 that Cellnex was looking at M&A opportunities throughout Europe.

Buying a non-controlling stake in Inwit “would be a contentious issue" because it would be more difficult to decide how to optimize the use of towers, said Emilio Barbera, a portfolio manager at Mirabaud in Barcelona.

Inwit owns 11,500 sites, or about 27 percent of all Italian towers, according to the company. The operator posted 2014 pro-forma revenue of 314 million euros. Cellnex reported sales of 436 million euros for last year, according to data compiled by Bloomberg.

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