Telecom Italia ups stake
Telecom Italia on Sunday was to proceed with its planned 21 billion euro (US$27.3 billion) takeover of Telecom Italia Mobile. With the shares acquired in the takeover, Telecom Italia, Italy's former phone monopoly, will increase its stake in Telecom Italia Mobile to 85 percent, from 56 percent. The 15 percent of Telecom Italia Mobile shares still publicly traded will be exchanged for newly created Telecom Italia shares as part of the merger. Telecom Italia is increasing its debt by almost 50 percent, to about 44 billion euros, to finance the deal so that it will control Telecom Italia Mobile's cash flow, which was 3.7 billion euros in 2003. Telecom Italia Mobile is one of Europe's most profitable cellphone operators and already accounts for 41 percent of Telecom Italia's sales and 55 percent of its operating profit.
Nokia to use single TI chip
Nokia Oyj, the world's largest mobile-phone maker, will start making handsets that are run by a single chip made by Texas Instruments Inc to reduce costs. Nokia plans to initially start selling the phones based on the single chip in "entry-level" mobile phone markets such as India and China, the companies said in a joint e-mailed release. Finland-based Nokia, whose sales are sputtering as phone prices drop, is aiming to cut costs to boost profitability. "The cooperation will allow Nokia to offer more cost-effective advanced handsets," the firms said in the release. "Cost, size, power and performance optimizations are crucial, especially for high-volume entry-level mobile phones." The handsets will be "voice-centric," which means that they will be mostly used for talking.
Nortel in joint venture
Canada's Nortel Networks Corp signed an agreement yesterday with South Korea's LG Electronics Inc to set up a joint venture to make and market high quality telecommunications equipment. The preliminary agreement was announced in Seoul, and the two companies were expected to finalize the deal for the 50-50 joint venture in the second quarter of this year. Financial details of the deal were not immediately available. The companies said in a statement the joint venture, which will be based in South Korea, will produce high-end telecommunications equipment and networking solutions to South Korea and other markets. LG Electronics is South Korea's biggest maker of home appliances, and Nortel is a major supplier of 3G networks.
Fiat in no hurry to sell to GM
Italian industrial group Fiat said yesterday that it would wait until at least Feb. 2 to exercise its right to sell the troubled Fiat Auto division to US giant General Motors. Fiat said mediation talks with GM that began on Dec. 16 regarding their industrial partnership will end on Feb. 1. Consequently, Fiat said it postponed the right to exercise its put option -- which gives it the right to sell its 90 percent stake in the loss-making car business Fiat Auto to GM -- to Feb. 2. Fiat reiterated that the put option remains "valid and enforceable" despite GM's claims to the contrary after Fiat sold some assets and recapitalized Fiat Auto. Fiat chief executive Sergio Marchionne added that the evolution of the relationship with GM "will not negatively impact the group's ability to reach its financial targets for 2005, 2006 and 2007."