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(Bloomberg) -- Billionaire Xavier Niel and CVC Capital Partners Plc are separately exploring deals for Telecom Italia SpA that could pave the way for an eventual combination of the former monopoly with the local unit of Niel’s Iliad SA, people with knowledge of the matter said.
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Buyout firm CVC is in talks to acquire Vivendi SE’s 24% holding in Telecom Italia as a first step to possibly gaining control of the carrier, the people said. That could then pave the way for a future combination with Iliad’s Italian unit, according to the people. Bloomberg News reported in December that CVC was exploring a purchase of Vivendi’s stake in Telecom Italia.
Iliad has separately been working on its own plan that would see it gain about a 35% stake in Telecom Italia in return for merging its Italian business into the former monopoly, the people said. It plans to seek a whitewash waiver to avoid having to make a full takeover bid, one of the people said.
Shares in Telecom Italia were trading 5% higher at 2:51 p.m. in Milan, giving the company a market value of €6.6 billion ($6.8 billion). Vivendi was also up 5% for a market capitalization of €2.9 billion.
As part of Iliad’s plan, it’s supportive of a private equity firm like CVC or Apax Partners buying Vivendi’s stake in Telecom Italia, and it could work together with them to pursue its consolidation plans, according to the people. Iliad sees about €800 million of operational expenditure synergies from a combination of its local unit with Telecom Italia, according to the people.
CVC has discussed its plans with the Italian government as it seeks to assuage any concerns, the people said. In addition to Telecom Italia’s core wireless business in Italy, it also has other operations including an enterprise services arm and a listed Brazilian unit.
Any move to combine Telecom Italia with Iliad’s local unit would likely face antitrust scrutiny, the people said. Representatives for Apax, CVC, Iliad, Telecom Italia, Vivendi and the Italian government declined to comment.
Last year, Telecom Italia completed the sale of its landline network to KKR & Co. in a deal valued at up to €22 billion that was aimed at slashing the phone carrier’s debt pile.
Telecom Italia is set to unveil its new three-year business plan on Feb. 12, the same day as its earnings report. Chief Executive Officer Pietro Labriola has signaled that Telecom Italia aims to resume paying dividends during that period. The company hasn’t paid a dividend since 2021.