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Telefónica completes Mediaset Premium deal

Telefónica has completed its acquisition of a stake in Mediaset’s Italian pay TV arm, Mediaset Premium, and has named Luis Velo Puig-Durán as its board representative.

The closure of the deal follows an agreement between the pair in July that saw Spain-based telco Telefónica also agree to acquire Mediaset’s stake in Spanish pay TV operator Digital+.

While closure of the Mediaset Premium deal had initially been expected at the end of last year, the appointment of Velo Puig-Durán, Telefónica’s global head of content, to the Premium board has been seen as a sign of Telefónica’s commitment to the Italian market.

Telefónica is acquiring an 11.1% stake in Mediaset Premium for €100 million (US$118 million), valuing the Italian pay TV unit at €900 million.

According to documentation seen by the Reuters news agency, Mediaset has retained the right of first refusal to the class B shares obtained by Telefónica. If Mediaset were to sell all or part of its holding in the pay TV unit, it could also potentially oblige Telefónica to sell its stake, a condition that will expire as of July 12 this year. Telefónica has similar rights.

Mediaset is believed to be keen to open Premium up to other investment partners such as Vivendi or Al Jazeera. However some observers believe that the relatively high valuation on the unit set by the Telefónica purchase could act as a disincentive to potential investors.

Mediaset Premium currently has about 1.7 million subscribers and reportedly hopes to attract about 700,000 additional customers from rival Sky Italia through an offering that includes the next three Champions League football tournaments and rights to Serie A Italian football.