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April 4, 2005

Telecom Italia offloads Greek unit for $1.4bn

Italian communications giant Telecom Italia has sold its Greek mobile phone unit, TIM Hellas Telecommunications, for 1.1bn euros ($1.4bn), as part of its ongoing strategy of offloading non-core assets in order to reduce debt.

By CBR Staff Writer

Telecom Italia Media has agreed to sell 81% of TIM Hellas to private equity firms Texas Pacific Group and Apax Partners Worldwide. The deal requires regulatory approval and is due to be finalized by July 2005. The two private equity firms said they expect to acquire the remaining stake in TIM Hellas for about the same price per share after the close.

TIM Hellas is the third-largest mobile phone operator in Greece, after Cosmote and Vodafone Greece, with 2.3 million mobile customers. For the 2004 fiscal year, it reported sales of about 840m euros ($1.1bn) but profit fell 14% to 78.8m euros ($101m) as it cut call costs and took charges after changing its name from Stet Hellas.

The sale of its Greece unit comes as part of Telecom Italia’s debt reduction activities. Last month, it sold its struggling IT services operation Finsiel to a venture headed by Italian entrepreneur Alberto Tripi in a deal that valued the company at 164m euros ($217m).

The dominant fixed-line supplier in Italy has been cutting back on its international operations. Telecom Italia has said it wants to increase its holdings in Brazil and it is also seeking to buy Turkey’s state-owned telephone company and is a partner in a mobile operator there.

At the same time the Italian carrier has also been trying to expand its broadband operations. Indeed, it is in the final stages of purchasing Paris, France-based LibertySurf, the French unit of Tiscali. The unit was put up for sale in order to help Tiscali, Europe’s third largest ISP, repay maturing bonds. Telecom Italia is paying 250m euros ($321m) to 300m euros ($385m) for the outfit, which has 800,000 customers.

Telecom Italia is also in the process of taking over its 86%-owned Telecom Italia Mobile SpA unit in a 21bn euros ($26.96bn) cash and share buyout. This could push Telecom Italia’s debt up from 30bn euros ($38.52bn) to about 44bn euros ($56.49bn), which makes asset sell-offs vital for Telecom Italia if it is to keep its debt burden at a manageable level.

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