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Olivetti plans Net offering
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November 22, 1999: 7:30 a.m. ET
Italian telecom mulls $10B ISP sale after restructuring plan turnaround
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LONDON (CNNfn) - Italy's Olivetti has accelerated its plan for Europe's largest Internet offering after the collapse Monday of a controversial plan to refinance its acquisition of Telecom Italia.
Olivetti was forced to reverse its original plan to transfer ownership of Telecom Italia Mobile (TIM), Europe's largest cellular operator, from Telecom Italia to Tecnost, the holding company for Olivetti's telecom assets.
The news sent shares in all of the participants surging after being battered in recent weeks by opposition to the restructuring plan. Tecnost stock gained 7.4 percent, Telecom Italia rose 4.1 percent, TIM rose 3.2 percent and Olivetti added 3.5 percent.
Tecnost carries a 14.9 billion euro ($15.4 billion) debt burden after Olivetti used the firm to beat back Deutsche Telekom's May offer, which was reached in agreement with Telecom Italia.
Transferring Telecom Italia's 60 percent stake in TIM to Tecnost would make it easier for Tecnost to raise cheaper funds to refinance its bond and loan obligations.
However, minority shareholders had opposed the terms of the Olivetti plan that would have seen TIM shareholders offered between 1.5 and 1.85 Tecnost shares for each TIM share. An independent evaluation by opponents had valued the TIM stock at around 2.2 Tecnost shares.
Olivetti has denied that it will seek to sell the TIM stake to a strategic partner.
The revised refinancing plan will center on the sale of a minority stake in Italy's largest Internet service provider, TIN.IT, currently wholly owned by Telecom Italia.
Olivetto confirmed that it will seek to spin off a minority stake in TIN.IT, though officials were unable to give further details.
TIN.IT has been valued at $10 billion but the premium on recent European Net offerings has led analysts to upgrade their forecasts to as high as $12 billion. Spain's Telefónica sold a minority stake in its Terra networks arm last week and saw the shares almost triple on their first day, valuing the company at $10.6 billion.
Italy is the least developed of the major western European Net markets, with penetration of just 3 percent at the end of last year. However, the number of users is expected to reach 1.55 million by the end of 1999 and pass 3 million by the end of next year.
TIN.IT's market dominance is being challenged by Tiscali, the fixed-line operator that launched a free ISP earlier this year and now boasts a 33 percent market share. Tiscali was offered last month and saw its shares jump almost 50 percent, valuing the company at $1.1 billion.
Tiscali stock soared almost 14 percent Monday and were suspended after reaching their daily trading limit. 
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