Italian incumbent is the subject of investment and NGN rollout speculation, plus other European tidbits to tickle the news palate

February 19, 2007

3 Min Read
Eurobites: Turnaround Time for Telecom Italia

Telecom Italia (TIM) looks set to undergo a radical transformation during the next few weeks, with a new structure approved, a new investor likely, and a new next-generation network (NGN) plan on the cards.

But the Italian giant isn't the only major European carrier in the news, as Deutsche Telekom AG (NYSE: DT), Portugal Telecom SGPS SA (NYSE: PT), and Telefónica SA (NYSE: TEF) are also involved in investment and NGN matters, while BT Group plc (NYSE: BT; London: BTA) has a new chairman.

TI in Transformation Mode
Telecom Italia is entering a new phase in its development, as the carrier's board has just approved a new organizational structure, a transformation that caused major upset for the operator last year. (See TI Adopts New Structure, Telecom Italia Upheaval Continues, and Telecom Italia Does the Splits.)

With that structure now in place, the carrier is set to outline its NGN plans to analysts, most likely on March 9, the day after the carrier issues its 2006 earnings report. Italian newspaper Il Sole 24 Ore reports that a €6.7 billion ($8.8 billion) capital expenditure plan, based around a new long-distance optical core, will be presented to investors. A spokesman for the carrier says such plans have already been made public by the carrier's chairman.

Meanwhile, speculation persists about potential new investors in Telecom Italia. Russian outfit Sistema JSFC (London: SSA) has already been linked with the purchase of a stake in holding company Olimpia SpA, which in turn owns 18 percent of Telecom Italia. Now Telefónica has admitted it's in talks about taking a stake in the Italian carrier. Some Italian media outlets suggest the Spanish giant's interest may be defensive, as it wouldn't want Deutsche Telekom or Orange (NYSE: FTE) influencing TI's strategy. (See Eurobites: Upheaval, M&A, and Disaster.)

Better Bid for PT
Having repeatedly said it wouldn't increase its €9.50 per share cash offer for Portugal Telecom, Sonaecom has now offered €10.50 per share in an effort to sway some of the Portuguese incumbent's investors. (See Sonae Closes In on Portugal Telecom.)

The carrier's board will consider the new offer, which values Portugal Telecom at nearly €12 billion ($15.8 billion), on Tuesday. It rejected the initial bid, made about a year ago, as too low and hostile. (See Eurobites: M&A, IPO & KPN.)

More Euro IPTV Rollouts
The ongoing ownership saga hasn't put Portugal Telecom's services projects on ice. The carrier is set to offer a 100-channel IPTV pilot service to about 5,000 customers in three cities, including the capital Lisbon, in May or June this year.

And in the U.K., France Telecom's Orange UK is set to launch an IPTV service to its British subscribers some time in the third quarter of this year, according to The Sunday Telegraph newspaper. The carrier will deploy mostly the same technology that underpins its French service, which had about 600,000 customers at the end of 2006. (See France Telecom: 'More IPTV, Please'.)

The U.K. service will reportedly be made available to TV sets, PCs, and mobiles.

Other news of interest
IBM Corp. (NYSE: IBM) has landed an important role as Deutsche Telekom's NGN service development partner; BT has named Sir Michael Rake as its next chairman, a move that will no doubt inspire countless newspaper employment timelines with the headline "Rake's Progress"; and Virgin Media Inc. (Nasdaq: VMED), otherwise known as U.K. cable operator NTL, is due to launch its video-on-demand service Monday evening in its latest attempt to prevent Sky and BT from dominating the triple-play market. (See DT Uses IBM for NGN, BT Names Next Chairman, Bell Sounds for British Broadband Brawl.)

— Ray Le Maistre, International News Editor, Light Reading

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