Telecom firm that approached Jobs about buying Apple pre-iPods is forced to sell off major unit

According to a report from Fortune, a few years before the iPod was introduced in 2001 when Apple was not the company it is today, a group of executives from Italy's former telephone monopoly, Telecom Italia SpA, flew to California to meet with Steve Jobs. At the time, Apple was competing with IBM in the computer industry and Telecom Italia was the sixth-largest telecom company in the world based on revenue. Back then, the Italian firm was worth over $100 billion and it wanted to make Jobs an offer to buy Apple in person.

Fast forward to today and Apple is valued at over three trillion dollars. The iPhone remains the biggest consumer product in the world while the Apple Watch is the biggest-selling timepiece in the world. And Telecom Italia is no longer riding high as it was when it offered to buy Apple. The Italian phone company has a crushing debt load of over 30 billion euros ($32 billion) and outside of its Italian phone business, its only foreign holding is of Brazil's third-largest phone company.

When Telecom Italia met with Jobs, it employed 120,000 people, a number that has since been cut to 40,000. And now, with its debt out of control, the company is being forced to divest itself of its domestic landline network which would make it the first telecom firm in Europe to do so. Ironically, considering Telecom Italia's interest in a company that was as American as "Apple" pie, a U.S. firm is believed to be interested in what the Italian telecom firm is selling.

The company interested in purchasing Telecom Italia's domestic landline network is private equity superstar KKR & Co. The price of the deal is rumored to be €23 billion (about $25 billion). Back in the 1980's the company was known as Kohlberg, Kravis, and Roberts and could strike fear into the heart of any CEO by amassing a position in the shares of the executive's company. Those were the days of leveraged buyouts funded by Michael Milken's junk bonds, and insider trading delivered millions in illegal profits to "arbs" like Ivan Boesky.

Laura Rovizzi, chief executive at Rome-based consultant Open Gate Italia, said, "Telecom Italia's future will now be mostly linked to its capacity of being more agile and luring new customers with more profitable services." After selling off the landline network, all that would remain of Telecom Italia would be its service unit. Rovizzi expects that some of the money that the telecom firm receives in its divestiture would have to be spent to acquire a tech firm with a business that can make Telecom Italia competitive.

One thing that we can be sure of, the company making the deal with Telecom Italia will not be Apple. The amazing thing about the fortunes of the two companies shows how product-driven success can quickly turn things around. Telecom Italia had no debt and a value of over $100 billion when it approached Apple; the latter's valuation was $5 billion at the time. Jobs turned down the deal.

Cell phones made landlines obsolete and the iPhone became a global smartphone phenomenon. Apple is now worth over $3 trillion and is the most valuable U.S. publicly traded company. And Telecom Italia  has a market cap of $6.23 billion. It's interesting to contemplate what might have happened had Steve Jobs decided all those years ago that he wanted to sell Apple and move on. Not only might the iPod, iPhone, iPad, Apple Watch, and AirPods not exist, the world might be completely different. Yes, the launch of the iPhone was a major global event.

You never know what the next big product will be and it's to the credit of Apple that it has run off quite a string of amazing hit products that not only catapulted Apple to new financial heights and captured the imagination of the public, but also negatively impacted firms like Telecom Italia SpA that were involved with older technology.