Telecom Italia should turn to a capital increase to protect its credit rating, according to comments made by chairman Franco Bernabe to the Italian parliament, following yesterday’s deal which saw Telefonica increase its stake in the Italian operator. The deal has run into opposition since it was announced.
The operator faces a debt mountain of €29 billion and the choice of either a capital increase or asset sales. Bernabe favours the former, and argued the case in front of parliament, following the announcement of a deal that sees Telefonica build its influence over Telecom Italia.
Meanwhile a spokesman for the country’s centre-left Democratic Party said the Italian government should ensure national interests are not endangered following the Telefonica deal, reports Reuters. The party, which is part of the country’s ruling coalition, said jobs and infrastructure might be at stake.
And the company’s independent board members have highlighted possible risks that Telefonica could force the Italian company to sell assets that are vital for its revival. The statement was made by lead independent director Luigi Zingales.
In addition, in the event of Telefonica taking full control of Telco, the investment vehicle that controls Telecom Italia, then Brazilian regulator Anatel would demand the Italian operator sell TIM Participacoes, its Brazilian mobile unit, a source at the regulator told Reuters.
And Argentina’s antitrust regulator said it will study Telefonica’s stakebuilding in Telco. The Spanish operator controls leading operator Telefonica de Argentina while Telecom Italia exercises indirect control over rival Telecom Argentina.
Separately, a sale of some or all of the Brazilian operator has been mooted as a possible asset sale to raise funds for debt repayment.
However, Bernabe argued in front of the parliament that asset sales might not happen soon enough for Telecom Italia and that the capital increase is a better alternative. The fund raising could be open to new and existing investors, he said.