Mañana

8 November 2013 By Fiona Maharg-Bravo

The Italian telco will exit Argentina, issue convertible bonds, and sell mobile phone towers to cut debt and boost investment at home. The plan, backed by part-owner Telefonica, won’t entirely solve TI’s debt problem. But TI avoids a firesale of its prized Brazilian unit.

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Telefonica reported a 9 percent decline in net profit in the nine months to September to 3.1 billion euros, slightly beating analysts’ forecasts. The Spanish company, Europe’s second-largest telecoms group by market value, said revenue rose 2.1 percent in the third quarter compared to the same period last year, allowing it to reach its full-year organic growth target one quarter early.
Net debt fell to 46.1 billion euros, below the company’s year-end target of 47 billion euros. Including recent disposals in the Czech Republic, Ireland and elsewhere, net debt stood at 44.6 billion euros.
Meanwhile, Telecom Italia said it would issue a 1.3 billion euro convertible bond and sell assets. In total, it wants to raise 4 billion euros to strengthen its balance sheet. The Italian operator said it had received an unsolicited offer for its 22.7 percent stake in Telecom Argentina. It also plans to sell and lease back more than 17,000 towers in Brazil and Italy, and unload an Italian media business.
Telefonica is the biggest shareholder in Telco, a holding company that effectively controls Telecom Italia. It plans to increase its economic stake in this vehicle, where it currently invests alongside three Italian financial institutions, to at least 70 percent.
By mid-morning on Nov. 8, Telecom Italia shares were trading down 5.3 percent. Telefonica’s rose 0.9 percent.

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