EU Rules to Weigh on Telecom Italia Network Spinoff, Says CEO -Report

ROME--Telecom Italia SpA (TI) will decide Thursday on whether to spin off its fixed-line network on the basis of European Union regulations, Chief Executive Marco Patuano said in an interview published Tuesday in Il Sole 24 Ore.

Soon-to-be promulgated regulations appear to be more "agnostic" about whether companies own or use old copper-wire networks, which means Telecom Italia's "historic decision" to spin off the network is now an "open question," Mr. Patuano said.

The plan, to be reviewed at a Dec. 6 board meeting, was expected to allow Telecom Italia to reduce its debt load by selling the copper-wire network offering last-mile connections to italian households to a new entity controlled by postal lender Cassa Depositi e Prestiti SpA.

Regulations aimed at setting costs are effective only for existing infrastructure, while for new-generation networks the crucial matter is allowed returns on investment, Mr. Patuano said. Telecom Italia plans to invest, he added.

The company is already investing in a fiberoptic network but that doesn't necessarily mean it will back off the plan, the CEO said.

He said the need to invest in updated infrastructure would lead to a rationalization of Italy's telecom industry in the next three to five years, with at least one company "disappearing or getting absorbed."

Il Sole 24 Ore separately reported that private-equity fund Clessidra and Cairo Communication SpA (CAI.MI) each plan to make offers of between 250 million euros ($324.6 million) and EUR300 million for Telecom Italia's television assets, which form part of its Telecom Italia Media SpA (TME.MI) subsidiary and include the La7 free-to-air broadcasting channel.

Those sums are well below Telecom Italia Media's enterprise value, the sum of its current market capitalization of around EUR242 million and EUR224 million in debt.

Newspaper website: www.ilsole24ore.com

Rome Bureau, Dow Jones Newswires; [phone]

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