Telecom Italia Shares Jump on Single-Network Speculation

   By Pietro Lombardi

Shares in Telecom Italia SpA (TIT.MI) trade sharply higher after the company said that it was open to collaborating with smaller rival Open Fiber, amid reports that the government is working on legislation that could lead to a merger of the companies' networks.

Telecom Italia "continues to support the idea of a single network in Italy, to avoid unnecessary duplication of infrastructure investment," Chief Executive Amos Genish said Monday. "We are keen to explore collaboration opportunities with Open Fiber to achieve this."

At 1142 GMT Telecom Italia shares trade 4.7% higher, bucking the trend on Italy's benchmark FTSE MIB index, which is down 0.6%.

The company is in the process of separating its fixed-access network into a separate entity known as Netco, which it will control. Open Fiber, controlled by Enel SpA (ENEL.MI) and state lender Cassa Depositi e Prestiti, has been setting up an ultra-broadband fiber optic network across the country.

Mr. Genish said his company should control the network, while deconsolidation of such assets would put the company's future at risk and undermine Italy's digital ambitions.

"Only by maintaining control can we guarantee the current levels of investment and employment, as well as the group's future successful deployment of the 5G infrastructure, where controlling both mobile and fiber infrastructure is going to be critical for the project success," he said.

Telecom Italia's shares are down about 25% so far this year, battered by a struggle for influence between its main shareholder Vivendi SA (VIV.FR) and activist investor Elliott Management Corp.

Telecom Italia swung to a loss of 1.40 billion euros ($1.59 billion) in the third quarter, hit by a EUR2 billion write-down on goodwill of the domestic business unit. It also said it couldn't back its 2018 debt-to-Ebitda guidance. The company has invested roughly EUR2.4 billion in a recent mobile spectrum auction, which included blocks of 5G internet bandwidth.

Write to Pietro Lombardi at pietro.lombardi@dowjones.com

(END) Dow Jones Newswires

November 12, 2018 07:14 ET (12:14 GMT)

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