Generali to Exit Telecom Italia as Early as June, CEO Says

Assicurazioni Generali SpA, the insurer that is part of the investor group that owns 22.4 percent of Telecom Italia SpA, plans to exit its holding as early as June, Chief Executive Officer Mario Greco said.

“We have two exit windows, one in June 2014 and one in February 2015,” Greco said today during a conference call as Generali announced another writedown in its Telecom Italia stake. “It’s likely that we will exit in June’s window.”

Generali owns a 19.3 percent stake in Telco SpA, the investor group that controls the board of Milan-based Telecom Italia, suggesting its holding in Italy’s largest phone company is about 4.3 percent. A stake of that size is worth about 500 million euros ($700 million) based on today’s trading.

The insurer is likely to sell the stake on the market or directly to another investor, said Carlo Alberto Carnevale Maffe, a professor of business strategy at Milan’s Bocconi University. Generali could join the other Italian shareholders of Telco, Intesa Sanpaolo SpA and Mediobanca SpA, to sell their stakes to the same buyer, Carnevale Maffe said. Officials at Mediobanca and Intesa declined to comment.

Spain’s Telefonica SA, the largest shareholder in Telco, is unlikely to buy Generali’s stake because of regulatory hurdles, Carnevale Maffe said. Brazil’s antitrust authorities fined Telefonica in December and ordered it to reduce its Brazilian holdings or convince Telecom Italia to sell its local unit. Telefonica and Telecom Italia both own phone carriers in Brazil, and together control more than half of its wireless market.

A representative for Madrid-based Telefonica, Spain’s largest phone company, declined to comment.

Shareholder Pact

Generali wrote down the value of its Telecom Italia holding to 72 cents a share last quarter. Telecom Italia shares rose 0.7 percent to 81.2 cents at 12:37 p.m. in Milan.

An exit by any of the Telco partners would unravel a 2007 shareholder pact that put Italy’s biggest phone company under the control of Telefonica and the Italian financial investors. They have written down their stakes in Telecom Italia multiple times over the years as intensifying competition has hurt sales, earnings and the phone company’s stock price.