After yesterday's exploit (+7,9%), Telecom Italia shares begin the session today with a drop of about three percentage points, to 0,882 euro, joining the tail of the Ftse Mib, which in the same minutes leaves the field the 1%.
The big moves in Telecom shares can be explained by the latest move by Telefonica, which yesterday with closed markets announced the start of the process of reducing (and perhaps exiting) the capital of the former Italian incumbent.
The operation will take place through the issuance of a bond by converting into Telecom Italia ordinary shares for a nominal amount of 750 million and with a three-year maturity. Based on Telecom Italia's market capitalization today, equal to 12,2 billion euros, the amount of the convertible would correspond to approximately 6,1% of Telecom Italia's capital and consequently to over a third of the share package held to the Spanish group. The bond will pay an annual nominal fixed interest of between 5,25% and 6%% and additional interest linked to dividends and cash distributions corresponding to Telecom shares.
Telefonica thus starts to reduce below 10% (14% to 8%) its stake in Telecom Italia, as requested by the Cade, the Brazilian authority which last December had identified the strengthening of the Spaniards in Telecom as a violation of the 2010 agreements and a change in the competitive balance in South America.
“Telefonica's descent into Telecom's capital – he comments Equita Sim – is dictated by the need to comply with the provisions of the Brazilian antitrust (under penalty of the obligation to open the capital of Vivo). It is therefore a forced sale and not inspired by strategic considerations or financial opportunity. In light of our expectation that Telecom's fundamentals will improve slightly in the coming quarters, the possible improvement in the competitive arena and the absence of synergies between Telecom and Telefonica, the fragmentation of Telecom Italia's shareholding appears to be decidedly positive news especially under the profile of the speculative appeal”. The broker therefore sees, beyond the expected reaction of the stock this morning, positive cues for the Telecom stock.
Yesterday, Telecom's quotations also helped to push up the hypothesis of the merger between Wind and 3 Italia which will simplify the picture of the offer on the crowded Italian market.
