Olivetti's programme of sell-offs met another stumbling block on Monday night when a deal to sell a stake in its Omnitel cellular phone business to Germany's Mannesmann fell through.
Bell Atlantic, which already owns a 16.7 per cent share in Omnitel Sistemi Radiocellulari (OSR), exercised its right of first refusal to any further stake and will take the 8.26 per cent allocated to Mannesmann. It will pay the same price - L432.5 billion ($283 million) - and the hitch is unlikely to delay the timing of the sale by more than a few weeks. This is critical for Olivetti, which plans to sell L800 billion in assets by the end of the year to reduce its debt. The main features of this plan are the sale of the Omnitel stake and of the PC unit, which has not found a buyer, although Olivetti is still confident of announcing one in the next few weeks.
Under the new OSR deal, Bell Atlantic will pay L404 billion of the sale price up front, with half of the remainder to be paid next year and the other half in 2001. This additional stake will make it the second largest partner in OSR, which in turn owns 70 per cent of Omnitel Pronto Italia, the country's main mobile phone concern. The other partner is Pronto Italia, in which Mannesmann has a 19.8 per cent investment. The German company had seen the Omnitel tie-up as a way to increase its influence in the joint venture.
Other shareholders in OSR are Cellular Communications International of the US with 15 per cent and Telia of Sweden with almost 10 per cent.
Although Olivetti shareholders are putting heavy pressure on the company to divest itself of its PC operations, some institutional investors are more ambivalent about selling telecomms assets, claiming they were the main attraction in the first place.
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