Telecom Italia chief says Brazil business TIM is “good asset”


Telecom Italia considers its Brazilian subsidiary a “good asset” for the group and believes the country offers opportunities for growth, Chief Executive Officer Flavio Cattaneo said on Wednesday.
Speculation Telecom Italia may sell majority-owned TIM Participações, Brazil’s second-largest wireless operator, has surfaced recently as the Italian firm steps up spending on faster broadband networks at home to fend off growing competition from the likes of utility Enel.
“Brazil is fundamental because Brazil today is a good asset for us,” Cattaneo said at the annual Morgan Stanley Technology, Media and Telecoms (TMT) conference in Barcelona.
Cattaneo, who took over as Telecom Italia CEO this year when his predecessor quit following clashes with top investor Vivendi , said Brazil offered opportunities for growth.
He said TIM Participações was looking for a partner to develop fibre coverage across Brazil faster and another such as Netflix or Sky so it could offer more content.
Cattaneo reiterated that he was not interested in merging with Brazilian rival Oi SA: “I love Brazil but I don’t know if we’re going to increase exposure there.”
Cattaneo also said listed companies in Brazil were currently undervalued compared with unlisted firms.
“If you analyse the value of mergers and acquisitions today in Brazil, it’s more or less between 8 to 10 times EBITDA (earnings before interest, taxes, depreciation and amortisation),” he said.
“If you analyse the value of listed companies, it’s more or less 4, 4.5 times EBITDA.”
Telecom Italia posted a slightly better-than-expected quarterly core earnings earlier this month, helped by cost cutting and strong results from its domestic operations.