Telecom Italia reportedly plans to raise €960 million ($1.1 billion) from the sale of a 40 per cent stake in its mobile tower unit via an initial public offering (IPO), increasing the targeted amount from around €730 million.
The Italian incumbent said this week it intends to launch an IPO for shares in Infrastrutture Wireless Italiane (Inwit), which it fully owns. According to Bloomberg, the operator has now increased the amount it hopes to raise after advisers raised their valuation estimates of the unit. Telecom Italia noted that Inwit owns about 11,500 towers throughout Italy.
Citing unnamed sources, Bloomberg said Inwit has now been valued at between €2 billion and €2.4 billion, up from the previous estimate of €1.8 billion. The sources added that the IPO price range would be set in June.
The move to sell a stake in the tower unit also follows a general trend among operators to sell off assets to reduce debt. For example, Italian rival Wind has agreed to sell 90 per cent of its tower unit Galata to Abertis Telecom Terrestre for €693 million.
Telecom Italia has struggled with debt in recent years and saw its credit rating downgraded to junk status. The net financial debt stood at €26.6 billion at the end of 2014, down by €156 million compared to 2013.
The company saw some glimmers of hope after turning an annual profit for the first time in three years: In 2014 the company posted a consolidated net profit of €1.35 billion compared to a loss of €674 million in 2013.
The company is also gaining France-based Vivendi as its largest shareholder: the media company is to obtain a 8.3 per cent stake in Telecom Italia after agreeing to sell its Brazilian unit GVT to Telefonica in a deal that is expected to close this month.
Telecom Italia chairman Giuseppe Recchi told shareholders this week that he welcomed foreign investors in the group.
"We reject the logic that foreign investments in Telecom Italia are dangerous: whoever brings capital and know-how contributes to make our company stronger, regardless of whether the investor is Italian or a foreigner," Recchi said, according to Reuters.
In February, Telecom Italia revealed that a new three-year plan had been approved: a total of €14.5 billion is to be spent on investments in Italy and Brazil from 2015-2017. Around €10 billion has been earmarked for investments in Italy including the expansion of fibre (to 75 per cent population coverage) and LTE (to 95 per cent coverage), while more than €4 billion is to be spent on improving 3G and 4G coverage in Brazil.
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