Italy Plans State-Backed Telecom Italia Deal With Poste

(Bloomberg) — Italy is pushing for a domestic alternative to international investors including CVC Capital Partners Plc and France’s Iliad SA circling around phone carrier Telecom Italia SpA.

Prime Minister Giorgia Meloni is backing a stake swap that would allow postal and banking operator Poste Italiane SpA to take over a 9.8% holding in Telecom Italia from state lender Cassa Depositi e Prestiti SpA, according to people familiar with the matter. 

The state lender, known as CDP, would in turn receive Poste’s 3.8% stake in payments specialist Nexi SpA, said the people, asking not to be named discussing confidential deliberations. The deal would also require a cash adjustment, they said. Poste’s board will review the plan on Saturday and is expected to announce a decision that day.

Telecom Italia shares fell as much as 7.7% in Milan on Friday following the Bloomberg report.

The government-backed move could hand Poste, which has expanded into financial and logistics services, a role as a bulwark against further foreign control of Italy’s phone industry. Telecom Italia recently emerged as a possible target as it slashed debt following the sale of its landline network. 

“Regulatory and political pressure” could prompt the shift toward Poste as a partner, said Edoardo Liuni, head of trading at Trading Room Roma. The option would be “less attractive than Iliad both from an industrial point of view and in client synergies.”

Meloni’s government earlier this week fended off an offer by CVC to buy a stake in Telecom Italia held by Vivendi SA, the phone carrier’s largest shareholder with around 24%, according to the people. The purchase could have paved the way for a merger with Iliad.

A representative for Italy’s Finance Ministry declined to comment. Representatives for Poste Italiane, Telecom Italia, CVC, and Iliad all declined to comment.

Since coming to power, Meloni’s right-wing government has kept a close eye on companies it considers “national champions.”

That’s translated into moves to ward off foreign purchases of Italian assets, whether by rounding up local investors or resorting to the “golden power” provision which allows the state to block takeovers of strategic assets in some cases.

The Meloni administration sees Poste as a natural fit for Telecom Italia. The postal operator already runs the country’s largest mobile virtual operator, which uses Vodafone Group Plc’s network. As a first step before a possible stake swap, Poste is expected to switch to Telecom Italia as its network provider, the people said. 

The premier helped engineer the spinoff and sale of Telecom Italia’s landline grid to US investment firm KKR & Co. in a deal that allowed the state to retain a stake in the new network company. She has also played a key role in Italy’s latest round of banking consolidation.

The government, which owns about 12% of Banca Monte dei Paschi di Siena SpA, is supporting the lender’s bid for Milan investment bank Mediobanca SpA to create a third large Italian banking group next to top lenders UniCredit SpA and Intesa Sanpaolo SpA. 

–With assistance from Flavia Rotondi.

(Updates with shares in fourth, analyst in sixth paragraph.)

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