Telecom Italia in a bind after losing GVT bid battle

viernes 29 de agosto de 2014 12:45 GYT
 

* CEO Marco Patuano needs a Plan B

* Future of Brazil unit in doubt

* Bankers, investors say Tel Italia needs new strategy

By Leila Abboud, Pamela Barbaglia and Stephen Jewkes

PARIS/LONDON/MILAN, Aug 29 (Reuters) - Telecom Italia has lost a promising path to earnings growth by failing to secure Brazilian broadband business GVT and may now turn from hunter to hunted in a fast-consolidating telecoms industry.

Winning the auction for French media company Vivendi's GVT was vital for both Telecom Italia and its rival, Spain's Telefonica, as their European markets have been shrinking. Italy was gripped by a mobile price war for much of last year, revenue is falling and competition remains tough.

Telecom Italia lost out to Telefonica as it could not afford to top its 7.45-billion-euro offer for GVT. Telecom Italia has debts of 32 billion euros ($42 billion) according to Moody's, and lost its investment-grade credit rating last year.

Buying GVT would have solved Telecom Italia's biggest weakness in Brazil - the fact that its mobile business lacks the broadband networks of its local rivals.

It may now consider exiting the country, where it makes a third of its revenue, helping it pay some of its debts but leaving it even more reliant on a sluggish domestic market.   Continuación...