Telecom Italia has reached an agreement with News Corporation for the creation of a single Italian pay-tv company on one platform, arising from the merger of Stream and Tele+.
On the basis of this agreement Telecom Italia will hold a 19.9% stake in the single platform and News Corporation will own the remaining 80.1%.
The agreement foresees:
That Telecom Italia will together with News Corporation sign the contract for the acquisition of Tele+;
a separate agreement with News Corporation to regulate relations between the two partners in the single platform.
The enterprise value of Tele+ is 920 million euros, of which 450 million euros is represented by the company’s financial indebtedness. Telecom Italia will pay 31.84 million euros at the closing for 19.9% of Tele+. Telecom Italia will waive commercial credits for 147 million euros owed by Stream to the companies in the Group due at the end of 2002 (this figure already been provided for in the 2001 financial statements). By the same token News Corporation will waive commercial credits and loans to Stream’s partners for the same amount.
The economic effect of this operation on Telecom Italia is a 276 million euros gross capital loss, including the pro quota losses estimated for Stream in the 2002.
The implementation of the contract is subject to approval by the competent authorities.