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Telecom Italia considers shake-up Telecom Italia splits phone units
(about 5 hours later)
Shares in Telecom Italia have been suspended as the board meets to discuss the future of the firm. Telecom Italia has approved a major reorganisation at the firm that will split its fixed line and mobile businesses into two new companies.
The company said the meeting would focus on the "reorganisation of the group's fixed and mobile assets". But, the firm declined to say whether the move would lead to the sale of its mobile business, TIM.
Analysts believe Telecom Italia may put its mobile business TIM up for sale, in a bid to focus on broadband services. The group also announced it had signed a media content deal with Fox networks to boost its internet offering.
The mobile operator, which Telecom Italia bought in 2005 after previously selling it off in the 1990s, could be worth up to 35bn euros (£23.7bn). Telecom Italia also said net profits fell 15.7% to 1.5bn euros ($1.78bn; £953m) in the first half of the year.
'Reputational risk' Analysts have suggested the shake-up at Telecom Italia is likely to lead to the sale of its mobile operator TIM.
Telecom Italia bought the business in 2005 after previously selling it off in the 1990s, experts suggest it could be worth up to 35bn euros (£23.7bn).
Split strategy
Chairman Marco Tronchetti Provera said the firm intended to hold onto 100% of the two companies, but he added it would be his "duty to examine any possible offer" for the businesses.
He added the firm had taken steps to split its mobile and fixed line activities in an effort to cut back on litigation and regulation covering Telecom Italia, as well as improving its ability to launch new products.
Selling TIM (Telecom Italia Mobile) would mark a major turnaround for Telecom Italia, which has recently been integrating its mobile and fixed-line phone operations.Selling TIM (Telecom Italia Mobile) would mark a major turnaround for Telecom Italia, which has recently been integrating its mobile and fixed-line phone operations.
Europe's fifth-largest telecoms firm faced "reputational risk in jettisoning "convergence" a little over a year after the completion of the TIM buy-in," said analysts at Morgan Stanley.
Separate reports have suggested that rival European telecoms firms including France Telecom, Deutsche Telekom, and Spain's Telifonica - as well as US private equity firm The Carlyle Group - could be interested in buying TIM.Separate reports have suggested that rival European telecoms firms including France Telecom, Deutsche Telekom, and Spain's Telifonica - as well as US private equity firm The Carlyle Group - could be interested in buying TIM.
Meanwhile, Telecom Italia is in discussions with Rupert Murdoch's News Corporation to distribute TV, films and European football on selected Telecom Italia European broadband networks. Telecom Italia is Italy's largest phone company, holding almost 70% of the market, and is the leading mobile operator in Brazil as well as Italy.
Telecom Italia said its executives had no plans to discuss the sale of any businesses at the board meeting, which was due to begin at 1500 local time (1300 GMT). It also has broadband interests in Italy, France, Germany and The Netherlands and owns a number of media interests including Telecom Italia Media - which owns MTV Italia, a news agency and TV channel La7.