Telefonica has struck a deal that will make it the largest shareholder in Telecom Italia, the Spanish giant said Tuesday in a regulatory filing.
The Madrid-based multinational unveiled a two-phase plan to boost to 70 percent its stake in holding company Telco, the largest shareholder in the Rome-based telecommunications company, which has lucrative assets in Brazil and Argentina.
Under the terms of the deal, Telefonica's interest in Telco's voting share capital will initially remain unchanged and the Spanish company must refrain from participating in or influencing any decisions affecting markets where both the Spanish and Italian operators are present, the filing said.
Telco will use the capital increase to pare its bank debt, Telefonica said, adding that starting from Jan. 1, 2014, and subject to regulatory approval, it will be able to exercise a call option to acquire the remaining stake in Telco held by Italian shareholders.
Telefonica's partners in Telco include Italian insurance company Generali and Italian banks Intesa Sanpaolo and Mediobanco.
The Spanish company would have a 22.45 percent indirect stake in TI if it buys out its partners in Telco.
The second-largest shareholder in Telecom Italia, Luxembourg-based Findim Group, has a 5 percent stake. EFE