Confusion reigns supreme above Telecom Italia's skies. Eight days after the closure of the window for the cancellation of the Telco agreement, the games are on. Indeed, every conclusion is possible. For now, the ball still seems to be in the hands of Cesar Alierta, the dominus of Telefonica, or the first single shareholder of Telco. Alierta, it is known, presented an offer (800 million) to the Italian shareholders (Generali, Mediobanca and intesa) because they agreed to remain in Telco, albeit with a reduced quota: the invitation was rejected by the sender. Alberto Nagel of Mediobanca has publicly underlined that Piazzetta Cuccia's Telecom adventure is coming to an end. The same attitude on the part of Generali, the Entente more optimistic.
HYPOTHESIS A: TELEFONICA BUYS BRAZIL. Now the indomitable Cesar is trying to get plan B off the ground: integration in stages between Telefonica and Telecom, subject to the sale of Tim Brasil and the manager in Argentina, or rather the jewel of the group chaired by Franco Bernabé. The operation is as necessary for the Spanish partner as it is difficult. Telefonica, which in Brazil controls Vivo, the largest mobile operator in the South American country, cannot absorb Tim Brasil for antitrust reasons. Therefore, in the event of a Madrid-Milan wedding, it would be necessary to proceed with the Tim Brasil stew: one part would be incorporated into Vivo, another would end up in the hands of America Movìl, the company headed by Carlos Slìm. The move would in any case be necessary to reduce the burden of the operation, certainly indigestible for Telefonica's coffers (52 billion in debt), which would certainly face a downgrading once Telecom Italia is absorbed (debts around 30 billion).
Will it go like this? The undertaking is difficult and expensive. Based on the multiples set in the latest operations in the sector, Tim Brasil is worth about double the current price at around 9 reais (9,7 yesterday). The stock is capitalized at 10,9 billion dollars, while Telecom Italia's share of approximately 67% is worth 7,3 billion dollars (5,4 billion euros). The request of the Italian company, therefore, cannot be less than 10 billion euros. Are Alierta (and Slìm) ready to put such a figure on the plate, destined to rise up to 15 billion given the obvious takeover bid? And with what guarantee of success? Bernabé is against the sale of the group's richest and most promising stake. And it is likely that, at least on this point, the president can count on a majority in the assembly. Unless Alierta, Slim or anyone else comes with an "indecent" offer.
HYPOTHESIS B: THE SPIN OF TELCO. AND PHONE IS REDUCED – But what could happen if it comes to day 28 without any agreement? In this case, the pro-quota demerger of Telco would be inevitable. The shareholding structure of Telecom will thus see the Italian block at 12 percent: of this overall package, the first shareholder is Generali with 6,85%, followed by Mediobanca with 2,6% and Intesa Sanpaolo with 2,6 percent . The Spaniards of Telefonica will have 10,3% in transparency, effectively representing the first single shareholder of Telecom. At this point Telefonica would find itself in the position of having to immediately deal with the Brazil question because it would be unlikely that it would be able to combine Vivo with de facto control of the most direct competitor, i.e. Tim Brasil.
Hence, in the hypothesis of a simple spin-off of Telco, the Spaniards could initially proceed with a lightening of their position in Telecom Italia, perhaps even by two percentage points, just enough to avoid "disconnecting" the second shareholder Generali too much. An option which for Telefonica, which holds the Telecom share at 1,2 euros per share against a market value of 0,57-058 euros, would in any case not be painless because it would inevitably lead to a capital loss. But it would help limit losses.
HYPOTHESIS C: THE FOREIGNER DOES NOT PASS. An Italian project has also matured: the Italian shareholders of Telco (Mediobanca, Intesa Sanpaolo and Generali) have developed an alternative plan to solve Telecom Italia's governance and financial problems in one fell swoop. The strategic move would be to sell the mobile telephony assets (Tim and Tim Brasil) obtaining 25 billion euros, thus reducing the debt from 28 billion and concentrate on fixed telephony.
The controlling shareholders would see the involvement of Findim, CDP and the F2i fund (which would contribute Metroweb): all Italian shareholders with Telefonica effectively excluded. It is a suggestive hypothesis, even if the price would be the definitive disappearance of Italian-controlled companies in the furniture sector, one of our local excellences until twenty years ago. But Telecom Italia, thus lightening Rita, could unleash a great deal of energy in the broadband game. The drawback actually lies in the prices: will it really be possible to place Tim and Tim Brasil for 25 billion?
MANY PLANS, LITTLE WILL TO INVEST
The plans, with many variations, multiply. But time and room for maneuver are shrinking. Beyond the convivial atmosphere that would have characterized "lunch with friends" (copyright by Tarak Ben Ammar), drastic and painful choices loom over the future of Telecom Italia (for the wallet) which, these days, are certainly not welcome. And the confirmation comes from Piazza Affari, where today the stock floats below 0,60 euros. No wonder: if the big shareholders are hesitant to invest, the market certainly cannot abandon itself to euphoria.
And yet, the challenge launched by Franco Bernabé to the assembled shareholders is perhaps the most serious and convinced in the recent history of Telecom, characterized more by torpor and clashes/meetings with regulators than by a desire for growth. The former incumbent of the Italian telecommunications companies cannot afford the luxury of playing defense again, as she has been forced to do in recent years under the ax of debts accumulated in the various misadventures following privatization.
The solution? To give the company a future and guarantee its strategic value on the market, a decisive upgrading of the fixed network is needed, with an investment that could mobilize between 3 and 4 billion. With these means, Telecom Italia will be able to raise the bar of its ambitions on the internal market. In fact, according to the new plan, Telecom Italia will aim to bring the optical fiber directly into the home and not just to the closets on the street or in the condominium cellars. In this way, the former incumbent could secure additional absolute (and better remunerated) leadership in the scenario that is looming in the immediate future, with the integration of the potential of smartphones and smart TVs. In short, instead of chasing the other operators in a battle for discounts on the one hand and helplessly assisting in the harvest of the profits of the various hardware and software producers (Google, Microsoft, Apple), Telecom Italia could go back to thinking in terms of actual growth. A scenario that justifies, among other things, a more aggressive corporate structure, based on the growth of many spas in place of the current divisions under the umbrella of a holding company renamed Tim, the best-known brand, along the lines of what happened in France where France Telecom promoted Orange.
But to do this, real money is needed, to be invested in technology and innovation. Rarer and nobler raw material than the cascade of billions of paper of the past, when the Telecom takeovers had the squeeze of the wealth accumulated by the group as the next step.
