The Hinduja Group is looking to acquiring a stake in Telecom Italia, Italy's largest telecom company and Europe’s fifth largest telecommunications group. The group is said to be examining buying tyre maker Pirelli's 18% stake in the Italian company.
Telecom Italia boasts of around 31 mn mobile subscribers in Italy and another 24 mn in Brazil. As of September 2006, it posted sales of €23 bn and its EBITDA was €9.8 bn. As Telecom Italia's market cap is about $77 bn, Pirelli's 18% stake will be valued at around $12-13 bn.
Telecom Italia is owned 18% by a company called Olimpia, which, in turn, is controlled by Pirelli, the Italian tyre and real estate group. Sometime ago, Pirelli increased its Olimpia holding to 80% by buying stakes owned by two banks. This transaction raised the possibility of Pirelli consolidating Olimpia's accounts with itself. Such a move would badly dent Pirelli's credit rating as its net debt would jump 31 times. The debt of both Olimpia and Telecom Italia is at around $57.12 bn. To avoid this, Pirelli is believed to be scouting around for buyers for the telecom company.
The Hinduja Group is also in the race for India’s fourth largest telecom company, Hutchison Essar, in which British telecom major Vodafone, Reliance Communications and Essar are bidding. On Friday, the group announced that it would begin due diligence of Hutchison Essar on January 24 and that a final bid will be submitted after that.
Blackstone, the private equity group, had said in November 2006 that it might be interested in taking a stake in Telecom Italia.
Read more in The Economic Times and Business Standard.
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