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Euro Giants Buy Back Offspring

Europe's major carriers are embarking on a major strategic U-turn by regaining total ownership of some of the business units they spun off during the telecom boom.

France Telecom SA (NYSE: FTE) led the way when it bought out the minority shareholders in its mobile unit Orange SA last April.

Now Telecom Italia SpA (NYSE: TI) is set to do the same, and is due to announce a plan to buy back the 44 percent of Telecom Italia Mobile SpA (Milan: TIM) it doesn't own for about €20 billion ($26.9 billion).

Why? The mobile operations generate billions of euros in cash, and having total ownership gives the operators greater control over its future network and service integration plans.

Deutsche Telekom AG (NYSE: DT) is doing something similar, but its focus is on broadband. The German giant reckons it needs to completely own and control T-Online International AG to properly pursue its triple-play (voice, video, data) ambitions, and is buying the 26.1 percent it spun off in 2000 (see DT Unveils T-Online Terms).

DT's offer of €8.99 per share has not been well received, however, as that is below the current share price and about a third of the stock's launch price.

DT has said it won't increase the price, but won't want anything to stall the process, as the carrier is keen to lock down all the rewards that come with total ownership of T-Online, including the cashflow.

Read the whole story at Light Reading.

— Daniel Sokolov, special to Light Reading, and Ray Le Maistre, International News Editor, Light Reading

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