Telecom Italia conversion plan could cut Vivendi stake

Vivendi’s interest in Telecom Italia, which the French media group has been hoping to grow to close to 25% after a series of moves designed to up its stake, could be reduced significantly by the Italian telco’s planned conversion of saving shares into ordinary shares.

Telecom Italia said last week that it planned to allow holders of savings shares to convert their holdings into ordinary shares at the price of one savings share plus €9.50 in cash for each savings share acquired. At the expiry of the tender offer, the company proposes a mandatory conversion of the remaining savings shares at the rate of 0.87 ordinary shares for every savings share held.

The move could reduce Vivendi’s current 20% stake in the Italian operator to a reported 13.9%. Vivendi has no savings shared that it could convert to ordinary shares under the proposal.

Telecom Italia said that the conversion would simplify the capital structure of the company and increase the free float and liquidity of the ordinary shares. The net proceeds will be used to further the operator’s investment in its fixed and mobile networks.

Vivendi management is to meet with representatives of Italian financial regulator Consob between now and the end of the month, amidst concerns that the French group could act in concert with French telecoms tycoon Xavier Niel, proprietor of Free, who has also moved to increase his stake in the Italian company in recent days.

Telecom Italia last week reported revenues for the first nine months of €14.9 billion, down 6.9%, and EBITDA of €5.6 billion, down 14.8%.