Tycoon Sawiris eyes Telecom Italia, but concerned about Rome

MILAN - Egyptian telecoms tycoon Naguib Sawiris said on Saturday he was still interested in taking a stake in Telecom Italia but might be discouraged if the Italian government was opposed.

In an emailed statement to Reuters, Sawiris said he was considering a "potential investment in Telecom Italia" but might not submit a proposal "in view of (Italy's)... alleged preference for Telefonica reported in the Italian press."

Telecom Italia is seen as an early takeover target in a shake-up of the sector expected to be triggered by Verizon Communications' (VZ.N: Quote, Profile, Research, Stock Buzz) $130 billion buyout of British operator Vodafone (VOD.L: Quote, Profile, Research, Stock Buzz) from their US wireless business.

The struggling Italian firm's board meets on September 19 to discuss how to push the company forward, including a possible change of the shareholder structure.

Italy's largest fixed-line operator telecoms firm by clients is controlled by a group of investors that own 22.4 per cent through corporate holding Telco, with Spanish peer Telefonica (TEF.MC: Quote, Profile, Research, Stock Buzz) the biggest shareholder.

In an unsourced report, an Italian newspaper said on Friday that Rome would prefer a merger between Telecom Italia and Telefonica rather than a buy-in by Sawiris.

However in an interview with Reuters, Italy Economy Minister Fabrizio Saccomanni said Rome welcomed foreign investments and companies should be left to decide on their future strategy.

"We don't have any strategy to prevent such investments," the minister said on the sidelines of the Ambrosetti forum in Cernobbio. "We don't necessarily have a role to play in single negotiations and I think it should be up to the companies involved to decide on the terms and conditions for foreign takeovers."

Telecom Italia declined to comment on Sawiris' statement.

The Egyptian said last year he was ready to inject 3 billion euros into Telecom Italia, a proposal that was rejected by the company's board.

He said on Saturday he had not submitted a new offer.

Telecom Italia shareholders have also rejected this year a merger offer from Hong Kong-based Hutchison Whampoa (0013.HK: Quote, Profile, Research, Stock Buzz), mainly due to differences over valuation.

The company is struggling under a 29 billion euro debt and shrinking margins in its core market Italy but owns valuable assets in Brazil and Argentina.

OPEN TO OPTIONS

"There is a commitment by the (Telecom Italia) chairman (Franco Bernabe) to present a plan and options by September 19," Enrico Cucchiani, CEO of Telecom Italia investor IntesaSanpaolo (ISP.MI: Quote, Profile, Research, Stock Buzz) told Reuters in a TV interview.

"We are open to all options that make strategic sense for the company" Regarding Intesa's Telecom Italia, stake, he added.

Italian insurer Generali (GASI.MI: Quote, Profile, Research, Stock Buzz), another core investor in Telecom Italia, said it was willing to sell its stake to focus on the insurance business but would decide on the timing on any potential sale after the board meeting.

"When we move out will depend very much on what we hear from the board on September 19 in terms of strategy" and ways to improve valuation, Generali Chairman Gabriele Galateri told Reuters.

Telco shareholders have up until September 28 to decide whether they want to exit a shareholder pact. Investment bank Mediobanca (MDBI.MI: Quote, Profile, Research, Stock Buzz) has said it is prepared to sell after writing down its stake to around current market value.

Telefonica, Generali and IntesaSanpaolo risk a negative impact if they sell their stakes at market price as they have booked the investment at twice the current share value.