Telecom Italia SpA’s board discussed a proposal by Chief Executive Officer Amos Genish to make an offer for Nextel Telecomunicacoes Ltda, a move that would help the carrier gain market share and spectrum in Brazil, according to people familiar with the matter.
The talks followed a report by Bloomberg News last week that Telecom Italia was considering a bid for Brazil’s fifth-largest wireless carrier. Telecom Italia acknowledged that its board met to discuss various scenarios on Monday, without being specific.
NII Holdings Inc., the majority owner of Nextel, surged as much as 13 percent and its shares were up 9.2 percent to $5.65 at 10:19 a.m. in New York. Telecom Italia fell 0.9 percent in Milan. Cowen analyst Lance Vitanza, in a note to clients Tuesday, said that Nextel is worth at least $2.5 billion, which would translate to $14 per share or more.
The proposal to buy Nextel would shore up Telecom Italia’s position in a fragmented market, where stiff competition has kept prices low. Brazil, which accounted for 23 percent of revenue last year, is a bright spot for the company at a time when its home market is under attack by discount French carrier Iliad SA.
“Telecom Italia’s board of directors reviewed opportunities to invest in assets and dismiss non-core assets,” the Milan-based company said in a statement.
A final decision hasn’t been made and Telecom Italia may decide not to bid, one of the people said.
Telecom Italia’s Brazilian business Tim Participacoes SA has steadily scooped up subscribers in recent years at the expense of Telefonica SA’s Vivo. Nextel had 3.2 million subscribers at the end of last year, but its operations have been losing money.
Genish, who spent several years in Brazil, also discussed possible asset sales at the board meeting. Divestitures under consideration include the company’s wholesale arm Sparkle and media unit Persidera, as well as a partial stake in its listed wireless tower unit Inwit SpA, people familiar with the matter said last week.
Persidera received two revised bids from I Squared Capital and RAI Way SpA, people familiar with the matter said on Monday. Rai Way, Italy’s state-owned broadcast tower company, confirmed it had made the approach. – Bloomberg Quint