Egyptian entrepreneur Naguib Sawiris is looking to pump US$3.9 billion into the debt ridden Telecom Italia and plans to expand into Brazil.
Although details of the proposal have not been made available, Sawiris told Reuters that it is “proposed that the capital increase be open to all shareholders, not just himself, and that it should be conducted around the current market price of 0.70 euros per share”.
“This proposal will provide a more stable financial structure for Telecom Italia going forward, more growth in Latin America and Brazil, and improved management through the infusion of people who have an excellent knowledge of the Italian market,” Sawiris said.
The businessman is optimistic that the injected cash would bring balance to the company and its share price in the market would also go up.
However, it won’t be that easy for Sawiris to expand to Brazil. Telecom Italia and Telefonica are both big players in Latin America and his move to strengthen Telecom Italia might bring up negative competition for Telefonica. The two companies own shares in an unregistered holding company, Telco.
Telecom Italia also have plans to spin off its fixed line business. This would be a mistake, Sawiris expressed.
“I believe this is a catastrophe,” he said. “If Telecom Italia does that, they will lose the only differentiator they have left in the telecom market in Italy.”
The company has since refuted claims of an impending spinoff of its fixed line business. The managers insist that they are still carrying out an analysis.
The company will have a meeting on December 6 to decide if they will downgrade their fixed line business.
Sawiris is a renowned businessman who specialises in the telecom industry. He is an executive chairman for Orascom Telecom Holding (OTH), which launched the first mobile operator in Egypt, Mobinil in 1998. He currently is listed by Forbes as the one of the top 40 richest men in Africa.