Xavier Niel sees Telecom Italia as consolidator rather than M&A target

Xavier Niel said he sees Telecom Italia as a consolidator in Europe rather than a target for consolidation, and indicated he might want to play a more active role at the Italian operator in future.

In an interview with Italian daily La Stampa, the French entrepreneur opened up for the first time on his strategy behind investing in options to buy shares in the Italian operator. The company has been a focus of speculation since Niel emerged as the potentially second-largest shareholder behind Vivendi, which now has a 20.5 per cent stake.

Although Telecom Italia has been seen as a potential target for other European operators including Orange, Niel said he believes the Italian operator has all it takes to be the predator. This is because the company has fewer constraints in Europe because it is only present in Italy, and has growth opportunities in Brazil through its operations in that market.

He added that he did not know whether or not Orange was interested in the Italian operator.

Niel said he thinks Telecom Italia is a great operator with a reasonable management but has some weaknesses.

"And I have some ideas," he told the paper (translation by Google Translate). "The future for Telecom [Italia], as for all operators, is in optical fibre. You have to give it the ability to invest for growth in both optical fibre and 4G mobile and generate higher revenues, while maintaining the lowest rates."

Although Niel refused to comment on whether he would convert his options into shares, he stressed that he was an industrial investor and not a financial "raider", and also said he was not acting on behalf of any other industry player.

Only this week, France-based Vivendi succeeded in gaining four seats on the Telecom Italia management board and blocked a share conversion plan that would have diluted its holding.

Niel made little comment on this, merely saying that he would judge based on what Vivendi does next.

For more:
- see this La Stampa article (in Italian)

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