Italtel eyes sale to private equity investor this summer, says CEO-Reuters

(Reuters) Italian telecoms equipment and software supplier Italtel has hired investment bank JP Morgan (JPM.N) to seek buyers, in particular among private equity funds, and expects to reach a deal this summer, its chief executive told Reuters on Friday.

Italtel, which is owned by Cisco (CSCO.O), a group of banks and Italian phone group Telecom Italia (TLIT.MI), has gone through a tough restructuring process and expects to finally return to profit this year with revenues rising 15 percent to reach 530 million euros in 2017.

The company is a small player in a market dominated by giants such as Ericsson (ERICb.ST), Nokia (NOK1V.HE), Alcatel (ALUA.PA) and Huawei (002502.SZ). It has an enterprise value of around 300 million euros, including net debt of around 180 million euros, Chief Executive Stefano Pileri said.

“The sale process has started and we are happy about this. We will talk to a lot of private equity investors,” he said. “We aim for a binding agreement by the end of August.”

The main plan is to sell a controlling stake, he said. Cisco could remain as a shareholder in the company or even increase its stake from 33 percent at present, he added.

Pileri said a cash injection of only a few “tens of millions of euros” could help the company do much better.

He said he hoped that Italy’s state-backed Strategic Fund would consider an investment in the company sooner or later while he did not see Indian commercial and industrial partner Tech Mahindra (TEML.NS) as a potential buyer for now.