Odd timing

11 Sep 2006 By Hugo Dixon

Trade buyers who desperately want the asset Telefonica, France Telecom and Deutsche Telekom won t have shareholder support to bid. And while financial buyers will be hot to deploy their war chests, TIM s sheer size may make it hard to get several competing consortia.

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Telecom Italia's board is due to meet on Monday afternoon to consider a plan to separate out its mobile and fixed networks. The separation would be the precursor to a probable sale of the mobile business, TIM, people familiar with the situation said. The fixed network might be sold too, but that was less likely. In addition, the group would put its assets outside Europe up for sale. The most significant of these is TIM Brazil.

Following a sale of TIM and TIM Brazil, a large proportion of the proceeds would be distributed to shareholders via dividends or share buybacks.

TI has not yet started negotiating to sell these assets, a person familiar with the situation said. There has been speculation that TIM could be of interest to private equity groups including Carlyle, Permira and Apax. There has also been speculation that trade buyers such as Telefonica, Deutsche Telekom and France Telecom could be interested.

Following a breakup of the group, TI would focus on broadband and media services. Last week Marco Tronchetti Provera, TI's chairman, held discussions with Rupert Murdoch about collaborating with Sky Italia, his satellite paytelevision business. One idea under discussion would be to merge Sky with the new slimmed down TI.

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