Italian telecommunications operator Telecom Italia has abandoned its plans to buy minority interests in certain global holdings of Cable & Wireless plc, the companies confirmed last week.
The two have been working for three months to create a global alliance to exploit what they called their various international network synergies. Telecom Italia has expressed a desire to invest further in international telecom markets to expand its global presence, while C&W has made clear its intention of unloading interests in which it has no dominant or controlling stake.
Telecom Italia was to buy all or part of C&W’s interests in French mobile phone company Bouygues Telecom, C&W West Indies and C&W Inc. of the United States.
The French deal has fallen through completely. “Cable & Wireless’ planned sale of its interest in Bouygues Telecom directly to Telecom Italia will not proceed,” read a C&W press release.
Early indicators of that deal’s demise manifested when shareholders of Bouygues Telecom said they would exercise their pre-emption rights over C&W’s agreement to sell a 20-percent stake to Telecom Italia.
C&W then instead offered the 20-percent interest to its shareholders for $279.25 million in cash, plus additional funds for interest and commitments up to completion of the sale. Telecom Italia already owns 19.6 percent of Bouygues Telecom.
C&W said it still hopes Telecom Italia will buy a 20-percent stake of C&W’s West Indies interest and 5 percent of the U.S. division, but “it is now unlikely that Telecom Italia will acquire a direct interest in C&W West Indies or C&W Inc. in the foreseeable future.”
C&W also said the planned global partnership has not been abandoned, despite the collapse of the investment deal.
In addition, Telecom Italia continues to consider similar partnerships with AT&T Corp. and the European alliance Unisource.
Analysts suspect Telecom Italia’s management turmoil may have played a factor in the deal’s collapse, the most recent drama of which occurred last week.
Vito Gamberale, who in Act I of the drama/tragedy resigned as director general of Telecom Italia last month, now has been asked to resign from his remaining role as chairman of the company’s cellular phone subsidiary, Telecom Italia Mobile.
A spokesman for Telecom Italia said the request was submitted to Gamberale in a letter from the parent company’s chairman, Gian Mario Rossignolo. Gamberale issued a statement saying that while he knew of no such letter, he had expected such a request.
Gamberale and Rossignolo have been involved in a boardroom power struggle since Rossignolo came to power at the beginning of the year.
The two apparently disagreed over how the company’s management should be structured following its privatization in October.
Gamberale said he resigned from Telecom Italia to dedicate himself to running TIM.
An Italian newspaper reported Telecom Italia offered Gamberale $4 million to resign, conditional upon his not joining a competitor nor disclosing the company’s management squabbles. It remained unclear at press time whether Gamberale had accepted that offer.
