The end is nigh for Telco, the largest shareholder group in Telecom Italia, after its directors approved requests from Italian investors to dissolve the shareholder pact that has existed since 2007.
Telco, which currently owns 22.4 per cent of Telecom Italia, also said it wrote down its stake in Italy's largest operator by €830.5 million ($1.1 billion) after the stock slumped.
Earlier in June, Generali, Mediobanca and Intesa Sanpaolo exercised their rights to request the demerger of Telco. The decision by the three Italian investors will see Telefónica become the single largest shareholder in Telecom Italia.
In a statement, Telco said its board "unanimously approved the proposed partial demerger of the company…as a result of which four newly incorporated beneficiary companies, 100 per cent-owned by each shareholder, will be allocated the respective shareholder's stake in Telecom Italia currently held by Telco."
This means that Telefónica would hold a 14.77 per cent stake in Telecom Italia and Generali a 4.32 per cent stake, while Intesa Sanpaolo and Mediobanca would each a 1.64 per cent stake.
As things stand, Telefónica owns around 66 per cent of Telco, and 46.18 per cent of the voting rights. Intesa Sanpaolo and Mediobanca each currently hold a 7.3 per cent shareholding and 11.62 per cent of the voting rights, while Generali owns around 19.3 per cent of Telco and 30.58 per cent of the voting rights.
The completion of the demerger is subject to approval by Brazilian, Argentine and Italian regulatory authorities as well as by Telecom Italia shareholders.
Also at the board meeting this week, the directors of Telco approved the company's draft financial statements as at April 30, reflecting a loss of €952.5 million due to the writedown and interest payments.
- see this Telco statement
Telefónica to be largest investor in Telecom Italia
Telecom Italia hit by domestic price war in Q1, but sees recovery ahead
Telecom Italia confirms Patuano as CEO, appoints Recchi as chairman
Report: Sawiris ready to invest up to $2B in Telecom Italia
Report: Telecom Italia looks to AT&T CEO for advice