Egyptian billionaire Sawiris offers to buy 30 % in Telecom Italia for $6.4 bn: report

Egyptian billionaire and founder of Orascom Telecom Holding Naguib Sawiris has offered to invest as much as €5 billion ($6.4 billion) for a stake in Telecom Italia, The Wall Street Journal today reported, citing sources close to the company.

At Telecom Italia's current market value, a €5-billion investment would account for some 30-per cent stake in Italy's largest telecommunications company.

The report said that Telecom Italia chief executive Franco Bernabe had brought Sawiris offer before the board last week for consideration, but acquiring such a large stake on the open market may trigger a mandatory full takeover offer.

The other unlikely option would be to get some of Telecom Italia's core shareholders to agree to divest part of their stakes in the Milan-based operator.

If the deal does go through, it would mark Sawiris return to the telecom market a year after he sold mobile operator Wind Telecom to Russia's VimpelCom in a $6.6 billion deal.

Telecom Italia, which is burdened with €30 billion ($38 billion) debt, more than double its market value, is currently planning to sell its fixed-line network for as much as €4 billion. Its other plan is to spin off this asset, and is in talks with state lender Cassa Depositi e Prestiti over a possible investment.

Telecom Italia was acquired in 2007 by a group led by Spanish telecommunications giant Telefónica; Generali, the largest Italian insurer; and Intesa Sanpaolo, Italy's biggest domestic bank. This group holds a combined 22.4 per cent of Telecom Italia through holding company Telco SpA.

Italy's recent economic downturn has had a disastrous effect on Telecom Italia's financial fortunes. The company's revenue in Italy fell by 5.2 per cent to €19 billion and posted a pretax loss of €1.95 billion compared to a pretax profit of €5.6 billion a year earlier.