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Telecom Italia to sell its stake in Entel25 January 2005
In a statement distributed by the Italian stock exchange, Telecom Italia said it would sell its entire 54.76 percent stake in Chile's largest wireless company, which is known as Entel, to Almendral, a Chilean holding company.
The transaction, set to be completed within the next three months, will allow Telecom Italia to reduce its net debt by about €1.1 billion, or $1.43 billion, the Italian company said without fully explaining the difference between the sale price and the debt write-down figure. Telecom Italia said it would take a €143 million charge on the sale.
Telecom Italia is taking over its wireless unit Telecom Italia Mobile in a €21 billion cash and share buyout that will increase its borrowings by almost half to about €44 billion.
"It makes sense since the company needs to address the debt issue, and what's not strategic is likely to be sold," Giacomo Chiorino, a fund manager at Nuovi Investimenti, said. "Entel's shares were doing well, so it looks like they got out at a good time."
Shares of Telecom Italia rose as much as 2 cents, or 0.6 percent, to €3.10 in afternoon trading, giving the company a market value of €45.9 billion.
Entel shares have gained 29 percent in the last year and closed at 4,500 Chilean pesos, or $7.75, on Monday in Santiago.
Marco Tronchetti Provera, the Telecom Italia chairman, wants to focus on the home market and to expand business in foreign markets where the company already has a foothold, including Turkey, Greece and Brazil.
"The disposal of the equity stake in Entel SA is consistent with Telecom Italia Group's strategy of rationalizing its international portfolio and focusing on areas of strategic interest with potential for growth," the company said.
The company, which has a wireless venture in Turkey, is also evaluating a bid for Turk Telekomunikasyon, Turkey's state-owned fixed-line telephone monopoly, Tronchetti Provera said Friday.
Merging with Telecom Italian Mobile, or TIM, will raise Telecom Italia's debt from €30 billion at the end of 2004 to make it one of the most indebted of the former telephone monopolies in Europe.
"The positive aspect of the sale is that they've done it quickly, even before the TIM merger is complete," said Matteo Novelli, an analyst at Exane in Paris.
The company may sell other units in Bolivia and in Peru to raise cash, Novelli of Exane said. Those sales may bring in as much as another €500 million for the company, he said.
Lower sales at C&W
Cable & Wireless, the British phone company, said its third-quarter sales fell 12 percent from a year earlier, Bloomberg News reported from London.
Revenue in the three months ended December dropped to £808 million, or $1.52 billion, from £917 million a year earlier, Cable & Wireless said. Still, that was better than the market had expected. Analysts had projected sales of about £792 million. The company sold its U.S. business in 2004.
Third-quarter sales in the Caribbean, which account for almost a fifth of sales, rose from the previous three months.
"The mobile performance in particular looks strong," Christian Maher, an analyst at Investec Securities, said.
Source: International Herald Tribune
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