Telecom Italia’s New CEO Is Ready to Relinquish Control of Network
(Bloomberg) -- Telecom Italia SpA's new Chief Executive Officer Pietro Labriola is ready to relinquish control of the company's network, something that no previous manager of Italy's ex-phone monopolist has so far been ready to do.
Driving the shift is Telecom Italia's record loss of 8.6 billion euros ($9.5 billion) in the last quarter, and the need to fend off KKR & Co.'s 10.8 billion-euro takeover bid. Shares fell as much as 16.3% on Wednesday. At this price, KKR's November offer of 0.505 euros per share is a 68% premium.
“We are ready to lose the control of the future network unit getting onboard financial and industrial partners,” Labriola said, adding this option isn't a taboo anymore, like it has been for almost a century since the foundation of Telecom Italia.
The challenge for Labriola is to show that Telecom Italia can bring out this value on its own. To do so, he's ready break with a long-standing company taboo and put the control of its prized landline network, its most valuable asset and a legacy of when the company was the state-owned phone monopolist, on the table.
Labriola presented a plan to carve out Telecom Italia's network in a call with analysts on Thursday. The main goal linked to network spinoff is getting a set of regulatory reliefs that would let the carrier better compete in the local market.
Labriola has been here before. Almost a decade ago, he worked on a similar grid spinoff plan for Telecom Italia that was eventually withdrawn.
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