Telecom Italia SpA, in a reversal of a recent and expensive consolidation, announced plans on Monday to spin off its fixed-line and mobile phone businesses into two companies. Its chairman also said he would consider offers to buy the mobile phone business.
In a conference call with analysts, the chairman, Marco Tronchetti Provera, said the company would consider offers for the unit, Telecom Italia Mobile, which generated 43 percent of sales last year. In a report this week, Deutsche Bank estimated its value at 42 billion euros, or more than US$53 billion.
Provera said the revamping, which would take about six months, was primarily intended to increase the financial transparency and efficiency of the Telecom Italia group. But he did not rule out a sale of the mobile phone business.
"For sure, if there is any offer, it is my duty to evaluate the offer," he said.
Among cell phone providers, Telecom Italia Mobile is the market leader in Italy with a 40 percent share, according to a British-based research firm, Analysys. It is also the No. 2 provider in Brazil behind Telefonica of Spain, with 24.3 percent.
Provera said he was undertaking the revamping to refocus the fixed-line business on broadband Internet use.
As fixed-line services lose business, companies have pinned their hopes on mobile operations. But the mobile phone markets of Telecom Italia, based in Milan, have become saturated, and low-cost competitors and resellers are driving down prices.
Some analysts expressed surprise at the change of course because Provera, after becoming chairman in 2001, initiated a consolidation of Telecom Italia's fixed-line and cellular businesses to save money and presumably increase efficiency.
That consolidation cost more than 100 million euros (now US$127 million), according to Lars Godell, a senior analyst at Forrester Research in Amsterdam. Now, Telecom Italia will have to spend at least as much to unwind the companies, Godell said.
"I think this is being driven by Telecom Italia's own short-term financial considerations," he added, "and has nothing to do with the overall trends in the industry."