Telecom Italia denies capital increase plan to finance Brazil deal

Telecom Italia on Monday denied reports that it plans to sell new shares to finance an acquisition in Brazil, as fresh reports say that the company's board is preparing to discuss options for its subsidiary in the country.

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Telecom Italia CEO Marco Patuano

In a brief statement, the company explained "that no operation to increase the capital of the company is being planned."

The statement was issued in response to reports last week and over the weekend that Telecom Italia CEO Marco Patuano would seek shareholder approval at a forthcoming board meeting to mount a bid to acquire Brazilian operator Oi, Reuters reported.

Reports in the Italian press indicated a capital increase by Telecom Italia could be considered as a way to fund that acquisition, the news agency added.

Telecom Italia's board are tipped to discuss plans for its Brazilian subsidiary TIM Participacoes--which operates under the TIM Brasil brand--this week, Reuters stated.

The Italian incumbent valued its 67 per cent stake in TIM Brasil at around €13 billion ($16.2 billion) in September, when reports emerged that rivals Oi and America Movil were considering a joint bid for the operator. Based on Telecom Italia's valuation, the total value of TIM Brasil is reckoned at around €20 billion.

Patuano has been seeking options for the Brazilian business after it lost out to Telefónica in the race to acquire local broadband operator Global Village Telecom (GVT)--a deal that would have enabled TIM Brasil to offer converged fixed and mobile services.

Telecom Italia's Brazil revenues fell 12.6 per cent year-on-year in the nine months to end-September, and the contribution of the business to total group revenue fell from 30.1 per cent in 2013 to 28.9 per cent in the recent nine-month period.

In October, the operator amended a deal to sell its stake in Telecom Argentina at the request of the acquirer--venture capital firm Fintech--following delays in securing regulatory approval for the transaction.

For more:
- see Telecom Italia's capital statement
- view the company's recent earnings statement
- see this Reuters report

Related Articles:
Telecom Italia heralds 'signs of change' despite fall in core profit
Telecom Italia to sell part of Argentina unit for $216M
Report: Telecom Italia values TIM Brasil stake at €13B
Telefónica cuts stake in Telecom Italia through bond sale
Reports: Telefónica, Telecom Italia prepare GVT bidding war, as Oi eyes TIM Brasil

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