Telefonica tightens grip on Telecom Italia

Spain's Telefonica has reached a deal to raise its stake in the shareholding pact that controls Telecom Italia, increasing its hold on the beleaguered Italian phone company.

Telefonica tightens grip on Telecom Italia
The iconic Telefonica building in Madrid. Photo: Javier Paredes

The Spanish giant, which currently owns 46 percent of holding company Telco, has agreed to pay a starting sum of €324 million ($437 million) to up its stake to 66 percent, Telefonica said in a statement.

The remaining shares of Telco are held by Italian banks Intesa Sanpaolo and Mediobanca, which each have 11.62 percent currently, and Generali, which has 30.58 percent.

The three will gradually pare their stakes, with Generali dropping to 19.32 percent and Mediobanca and Intesa Sanpaolo to 7.34 percent each.

Telefonica will maintain its existing voting rights at 46.2 percent.

The Spanish carrier will have the right in a second phase to increase its stake in Telco to 70 percent, and the option to purchase the rest of the shares from its Italian partners from 2014.

Telefonica said it "renews its commitment to contribute to the development of Telecom Italia in its domestic market."

Telecom Italia, once the national telephone company, has been struggling with a price war in the market and with the recession.

In March, it posted a net loss of €1.627 billion for 2012, hit by an asset write-down of more than €4.4 billion in part on investments in Brazil.

Telecom Italia's shares were sharply up on the Italian stock market shortly after opening on Tuesday at 3.05 percent. Milan's MIB index of leading shares was 0.26 percent higher overall.

The news met with mixed reaction in Italy.

"The Telefonica-Telecom deal is an important turning point for our industrial future," said Marcella Panucci, director general of Italy's employers lobby Confindustria.

But Luigi Angeletti, general secretary of the Italian Labour Union (UIL), described it as "another hard blow" for the country that would have a knock-on effect on employment.

"We are losing another of the few, remaining big companies under Italian control. Inevitably, in the coming years, when it comes to deciding where to invest, decisions will be taken on the basis of interests not in Rome but Madrid," he said.

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.
For members


There are still 16,000 public telephones in Spain

Spain has a law to provide at least one payphone for every 3,000 inhabitants, even though an average of one call a day is made from them.

There are still 16,000 public telephones in Spain
Photo: pawpopa3336/Depositphotos

New data reveals that Spain currently has over 16,000 public payphone dotted around the length of breadth of Spain even though an average of one call a day is made from them.

Telefonica sources cited by news agency Efe revealed that Spain's biggest telecommunications company currently spends €4.52 million a year maintaining the phone booths.

Despite the fact that they are rarely used, Telefonica is tied to a “universal service obligation” imposed by the government to provide and maintain in working order a public payphone for every 3,000 inhabitants in each town of 1,000 or more and one cabin in all municipalities of less than 1,000 inhabitants.

The company estimates that of the 16,000 currently in use, half are almost never used and 12,000 ceased to be profitable years ago, losing the company some €3 million  a year.

The number of payphones has been vastly reduced since the  introduction of mobile phones. Twenty years ago there were almost four times as many payphones across Spain  –  55,000 payphones available in 1999 – and you could expect to find one on many a street corner.

Spain's communications regulator CNMC has called on the government to drop the universal service obligation for public payphones after a recent survey found that nearly 9 in 10 Spaniards (88 percent) admitted to never having used a public payphone in their life.

When was the last time you used one?

READ ALSO: Could technology be killing off Spain's sociable mealtimes?