By Manuela Mesco And Shayndi Raice
Telecom Italia SpA's Chief Executive Marco Patuano on Friday
said his company isn't focused on a tie-up with its Brazilian
competitor Oi, but would "come to the table" if someone made a good
offer for the company's own Brazilian asset.
"My desk is quite full right now," Mr. Patuano said during the
presentation of Telecom Italia's 2015-2017 strategy plan, which
showcased how the management will focus on bringing the company
back to growth by 2017.
In November last year, Telecom Italia said that it would explore
a number of options to integrate its Brazilian unit TIM
Participacoes with competitor Oi in preparation for the a major
shakeup and possible consolidation in the Brazilian
telecommunication market.
But Mr. Patuano said the company decided against a deal for Oi
when it became evident that it would be too complex and not add
enough value. He said it took the company 45 days to do due
diligence when it made an offer for Brazilian operator GVT in 2004,
but it took almost four months to assess Oi. He said his company
realized that "a straightforward deal is not evident" for Oi.
With plans for a tie-up with Brazil's Oi off the table, Mr.
Patuano said Telecom Italia's will focus on improving the
performance of its overall business.
In Brazil, the firm will invest about EUR4 billion ($4.55
billion) to extend 3G and 4G coverage. In Italy, where it will
invest the remaining funds, the company plans to extend its
fiber-optic service to reach about 75% of the population by 2017.
This is expected to boost the number of its subscribers.
The company has been hit by intense competition and the
long-lasting recession in its domestic market, which accounts for
nearly two third of its overall revenues.
The telecom operator estimates that such investments, together
with higher margins and sales, will lead to a growth in earnings
before interest, tax, depreciation and amortization, or Ebitda in
2017. Domestic Ebitda should stabilize in 2016 and increase in
2017.
The operator also said it plans to make efficiency cuts to save
around EUR1 billion over the next three years. It added it is
likely to pay only the minimum dividend for savings shares on 2014
earnings and no dividend on ordinary ones.
Telecom Italia added it has decided to start a process to list
its domestic mobile towers on the stock market.
Earlier on Friday, Telecom Italia said its preliminary 2014
revenue declined 8% to $21.6 billion. It was hit by the weakness of
the Italian market, where sales fell 6.6% on the year to EUR15.3
billion.
Preliminary earnings before interest, taxes, depreciation and
amortization, or Ebitda, was EUR8.8 billion, down 8% from the year
earlier.
It added that it will pay no dividend on ordinary shares for
2014 but it is likely to pay a minimum dividend for savings
shares.
Write to Manuela Mesco at manuela.mesco@wsj.com and Shayndi
Raice at shayndi.raice@wsj.com
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