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Telecom Italia: Board of Directors approved Tim merger into Telecom Italia

Telecom Italia Board of Directors Meets

12/21/2005 - 04:15 PM

Tim Italia S.p.A merger into Telecom Italia S.p.A. approved

Sale of real estate worth over 1 billion euro approved as part of the process of space optimization

Maximum ceiling for Euro Medium Term Note programme (EMTN)  for bond issues raised. Eventual new issues up to a maximum of 4.5 billion euro in 2006 authorized

Early repayment of loan maturing in october 2007 approved

The Board of Directors of Telecom Italia, chaired by Marco Tronchetti Provera, today met and approved:

1) the disposal of real estate properties worth a total in excess of 1 billion euro as part of the company’s real estate asset rationalization and optimization process, connected to the programme of space rationalization, after having received and favorably evaluated two offers presented by leading investors in the sector.

The properties concerned, previously transferred from Telecom Italia S.p.A to a group company, Olivetti Multi Service (OMS), and leased back by them to Telecom Italia on a multi-year basis, are now being transferred to two funds. The funds’ stakes will then be sold to two joint ventures 65%-controlled respectively by Morgan Stanley Real Estate Funds and Cypress Grove International, with Pirelli & C. Real Estate holding the remaining minority shareholding in both joint ventures.

The evaluation of the real-estate portfolio being sold was carried out by the CB Richard Ellis company in accordance with the criteria of international best practice, and confirmed by a dedicated fairness opinion issued by Scenari Immobiliari S.r.l., an independent study and research institute that analyzes real-estate markets.

The operation will be executed in tranches between the end of 2005 and June 2006.

2) the merger of TIM Italia S.p.A. into Telecom Italia S.p.A., subsequent to the adopted corporate structure changes as announced on 8 November 2005. A similar decision was taken by the board of TIM Italia S.p.A. The operation constitutes the natural completion, from a company perspective, of the integration process launched last year, as well as matching the new organizational model, which has brought the management and development of fixed and mobile telecommunications services and internet services into a single operating unit;

3) the early repayment of the “TELECOM ITALIA S.p.A. Euro 1,000,000,000 Floating Rate Notes due 2007” variable rate bond loan maturing on October 29, 2007. This repayment will take place as announced to the market on 29 November. The reimbursement will be covered using funds raised through a bond issue of the same value launched on 29 November and finalized on 6 December 2005.

The repayment will take place on 29 January 2006, the first useful date allowed under the rules of the issue. Overall, the issue and early reimbursement operation will allow the global offer of the Group’s securities in circulation to remain unchanged, while launching the re-financing of debt maturing in 2007;

4) the re-definition of the maximum ceiling for the Euro Medium Term Note (EMTN) programme, which regulates the placement, in various operations, tranches and currencies, of bond issues by Telecom Italia and/or its 100%-owned subsidiary Telecom Italia Finance S.A.. The maximum ceiling has been raised to 15 billion euro from 10 billion euro previously (of which marginally less than 8 billion euro has already been used).

At the same time, the Board of Directors authorized the issue in 2006 of non-convertible bond loans to a maximum value of 4.5 billion euro. In this manner, the company will have available more effective instruments for rapid and efficient access to capital markets, so as to be able to take quick advantage of eventual windows of opportunity in the re-financing market for residual 2007 maturities.

Milan, 21 December 2005