Flavio Cattaneo, the CEO of Telecom Italia SpA (ADR)(NYSE:TI), said that they consider company’s Brazilian subsidiary unit a “good asset” for them and considers the nation provides prospects for growth. Speculation the company may offer majority-owned TIM Participações, Brazil’s leading wireless operator, has appeared recently as the Italian company steps up outlay on faster broadband structure at home to fend off increasing competition from same that of utility Enel.
The highlights
The CEO of Telecom said that Brazil is vital market for them, and therefore company’s subsidiary is an interesting asset for them. This view was expressed at the annual Morgan Stanley TMT conference held in Barcelona. Cattaneo, who started with CEO role of Telecom Italia this year when his precursor quit following clatters with top financier Vivendi, said Brazil presented immense growth opportunities.
He added TIM Participações was seeking an associate to advance fiber coverage in Brazil quicker and another such as Sky or Netflix so it could provide more content. Cattaneo restated that he was not inclined in merging with Brazilian peer, Oi SA. They love Brazil but they don’t know if they are going to expand exposure there. Listed firms in Brazil were presently undervalued as against the unlisted firms.
If the mergers and acquisitions opportunities in Brazil are assessed today, it’s more or less around 8 to 10 times EBITDA. At the same time, if the value of listed firms is analyzed, it’s more or less 4 to 4.5 times EBITDA.
Telecom Italia recorded a slightly better-than-expected quarterly earnings last month, helped by cost saving and strong report from its domestic businesses. Prior to that, in the month of October, the company reported that a heavy debt tied to bankrupt Oi (NYSE:OIBR) indicates that Telecom Italia isn’t interested in an acquisition.
In last trading session, the stock price of Telecom Italia declined 0.40% to close the day at $7.45. The decline came at a share volume of 166,044 compared to average share volume of 92.224.
