Telecom Italia move sparks Mediaset merger speculation

Telecom Italia has reportedly initiated talks with Vivendi, in a bid to counter Telefónica’s bid for the latter’s Brazilian asset GVT, that could see Vivendi take a stake in either Telecom Italia or Telecom Italia Media.

The report has stirred speculation about the possibility of some sort of future tie-up between Italian broadcaster Mediaset and Telecom Italia. Vivendi is known to have had talks with Mediaset about the possibility of taking a stake in the latter’s pay TV arm Mediaset Premium.

Bloomberg reported that Telecom Italia CEO Marco Patuano and Vivendi chairman Vincent Bolloré have had talks, citing unmanned sources with knowledge of the matter. According to Bloomberg, Telefónica’s offer for GVT, which included the option for Vivendi to take over part of the Spanish telco’s stake in Telecom Italia after the Brazilian deal closed, came after Telefónica executives found out about earlier talks between Telecom Italia and Vivendi.

Bloomberg reported that Telecom Italia has proposed a wider alliance with Vivendi, covering not only GVT but the possibility of the Italian telco taking content from Vivendi’s Canal+. Vivendi’s Bolloré is believed to be keen to establish relationships, including the acquisition of minority stakes, with companies that could distribute Vivendi’s content.

According to a separate report byReuters, Telecom Italia executives are working on a possible deal with Citigroup, Banco Bradesco and Mediobanco.

Bolloré is himself a shareholder in Mediobanco, which is also a shareholder in Telecom Italia via the Telco investment vehicle, through which Telefónica also holds its interest in the Italian telco.

According to unnamed sources cited by Reuters, Mediaset Premium could ultimately be folded into Telecom Italia if Vivendi acquires an interest in both entities, even though this is complicated somewhat by the fact that Telefónica’s deal with Mediaset last month to acquire its 22% stake in Spanish pay TV operator Digital+/Canal+ will see it take an 11% stake of its own in Mediaset Premium.

Vivendi’s board will consider the Telefónica bid at its next meeting at the end of this month.