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Telecom Italia: Tin.It-Seat project approved

02/17/2000 - 02:00 PM

The Board of Telecom Italia, which met today in Rome, reviewed and approved the preliminary agreements reached with the controlling shareholders and the management of Seat Pagine Gialle (Seat Yellow Pages) and the industrial project relating to the integration of the activities of Tin.it with those of Seat. The Board mandated Chairman Roberto Colaninno to finalise the agreements, and granted him all the necessary powers to do so.

The agreements entail Telecom Italia increasing to 29.9% its holding in the ordinary share capital of Seat, at a price of Euro 4.5 per share, which will be followed by the actual combination of Tin.it and Seat according to a process the details of which are currently being defined. Further, it is intended that those Seat ordinary shareholders who do not intend to participate in the project will have the opportunity to participate in a public tender offer to be made at a price equivalent to Euro 4.2 per share. Also being studied is the possibility of including in the public tender offer the saving shares of Seat Pagine Gialle at a price that reflects a discount of 30% with respect to the price offered in the tender offer to ordinary shares. In any event, the option of converting saving shares into ordinary shares at the same discount of 30% will be granted.

The transaction is expected to be completed by the end of July 2000.

The financial structure of the transaction will be presented at the meeting of the Telecom Italia Board called for 1 March 2000, which will also examine the Group´s fiscal year 1999 preliminary results. The integration project replaces and improves on the previous plan to seek a stock exchange listing for shares in Tin.it. In the context of the new project, Telecom Italia will ensure preferential treatment for all its shareholders through the granting of rights and/or shares in the new entity resulting from the integration of Tin.it and Seat Pagine Gialle.

The Industrial Project

The combination of Tin.it and Seat Pagine Gialle will allow the new company to capture the full synergies arising from the complementary nature of their respective businesses, creating a company capable of delivering the full range of fundamental internet services to the consumer and small and medium size business markets. These encompass internet access, portals, hosting, and electronic commerce solutions.

With regard to the consumer market, the key drivers will be the development of new broadband technologies and the integration of content and access capabilities. Seat, through its Virgilio portal, will substantially increase the content available through Tin.it, whose current strength lies in its technological capabilities. In the small and medium size business market, which is still in its early growth stages, the ability to offer simple, flexible, integrated solutions and the capacity to support clients in their online activities will be key. The online availability of Pagine Gialle along with the salesforce and promotional capabilities of Seat will complement Tin.it´s technology offer, providing the elements necessary to address this market´s specific requirements.

The new company´s international strategy will be based on its ability to offer Italian content, information and products to a potential overseas customer base estimated at some 330 million individuals. The combination of Tin.it and Seat will result in a business capable of competing successfully in the wider European market in the high growth "new economy" sector.

Tin.it is currently Italy´s largest ISP with over 2,500,000 subscribers, as at 15 February 2000, of which 700,000 are paying, generating 700 million minutes per month of traffic. It is the leader in e-mail (2.5 million per day) and the second Italian portal with some 70 million pageviews per month. Seat´s key strengths lie in its distribution network targeting small and medium size businesses, its Internet assets and its advertising concessions. Seat has a salesforce over 2,000 strong, with some 640,000 clients, to which will be added at the conclusion of the current Public Share Exchange Offer, Buffetti´s network of 1,200 outlets covering a client base of some 4,000,000. The Virgilio portal is considered Italy´s most visited site with 100 million pageviews per month.

The Board also approved the sale of the Group´s 60% holding in Teleleasing to Selma BPM of the Mediobanca Group for a consideration of approximately Lira 55 billion. The transaction, which gives an implied value for the whole of Teleleasing at Lira 158 billion (1.7 times book value), provides, in the first instance, for the spin-off of an arm of the business consisting of two property assets, into a new company with net assets of some Lira 65 billion.

The transaction provides for a refinancing by the Mediobanca Group, amounting to some Lira 1,200 billion, of the intra group borrowings used to finance the majority of Teleleasing´s assets. Telecom Italia will retain a 20% holding in Teleleasing and will continue to work with Teleleasing as its preferred partner in the area of leasing.

The Board also adopted a code of Corporate Governance consistent with the self-governance guidelines defined by the Italian Stock Exchange, and approved a new stock option programme for the Group´s management.

Finally, the Board was informed of the capital increase approved by the Board of Stream on 4 February 2000. The form and the amount of the capital increase will be such to permit the company to meet its economic and financial obligations and to pursue its growth and development objectives as agreed by its shareholders.

Rome, 17 February 2000