Telecom Italia Should Be Split in Two, Minister Calenda Says

Updated on
  • Calenda says ‘would be wise’ to reduce Telecom Italia’s fine
  • Economic development minister speaks to Bloomberg Television

Telecom Italia SpA should be split into two separate listed companies with one entity handling its commercial services and the other its landline network, Italian Economic Development Minister Carlo Calenda said in an interview.

“My opinion is very clear, I think that we should have two legal entities, separated, on the market. I think that they are considering this,” Calenda told Bloomberg Television in an interview at his ministry in Rome on Monday. “They are studying the various possibilities and opportunities.”

Carlo Calenda on Jan. 8.

Photographer: Alessia Pierdomenico/Bloomberg

Calenda, whose ministry oversees the telecoms sector, said he was also in talks with Telecom Italia “to define the perimeter of the network, which is not easy at all.” He said progress was being made as the company is working with telecommunications authority AGCOM on the spinoff. “It is a very important operation and will take time to complete.”

The company may split in order to address government concerns over foreign ownership of the network, an asset valued at about 15 billion euros ($18 billion) that Italy considers strategic. French media conglomerate Vivendi SA, Telecom Italia’s largest shareholder with a 24 percent stake, increased its influence over the Italian phone company last year.

Vivendi’s strategy led the Italian government to invoke so-called “golden power” authority to curb the French company’s influence. In September, an Italian government panel determined that the phone carrier should have informed the prime minister earlier of Vivendi’s increased role. As a result, Telecom Italia risks a fine of about 1 percent of Telecom Italia and Vivendi’s combined sales, which would amount to about 300 million euros.

Calenda said he needs to understand whether a fine imposed on Telecom Italia under golden power legislation can be reduced.

“The problem is related to the amount of the fine that we, according with the law, should give to them because it is really very important, it is one percent of the turnover” Calenda said.

“Now, what we are asking the State Council is if we need to stick to this number or we have space” to change the amount if Telecom accepts all the demands made of it, Calenda said. “I think it would be wise to reduce the fine but we need to understand if this is feasible from a purely legal point of view.”

The minister said Telecom Italia told him “they are fine” with the main prescriptions beyond the fine, adding that “they are already working in order to be compliant with it.”

Telecom Italia will have to set up measures to show it is compliant with golden power requirements by mid-January.

Premier Paolo Gentiloni decided to apply the powers to the company’s main phone service, branded TIM, and two other units: its Sparkle wholesale arm, which owns underwater cables from the Mediterranean region to the U.S. and Israel, and a smaller unit called Telsy Elettronica that supplies cryptography for mobile phones used by the military and top politicians.

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