After several months of indecision, the American investment fund KKR, in partnership with the Italian government led by Giorgia Meloni, has submitted a firm offer to acquire the fixed network of Telecom Italia (TIM). The North American investment fund has also submitted a non-binding proposal for Sparkle, a subsidiary of the Italian operator specializing in submarine cables, while awaiting a firm offer « within four to eight weeks ».
Le montant de l’offre varie toujours entre 20 et 23 milliards d’euros, sujet à certaines conditions, dont environ une dizaine de milliards d’euros de dette, a précisé à l’AFP une source financière proche du dossier.« I cannot reword »
Le groupe français Vivendi, qui détient 23,75% de Telecom Italia, pourrait cependant contester cette vente lors d’une éventuelle assemblée générale des actionnaires appelée à se prononcer sur la transaction.
A long-standing project
With this new offer, the KKR fund is finally realizing its long-standing plan to acquire the infrastructure that Telecom Italia is looking to sell in order to reduce its massive debt, while Rome plans to later take a stake of up to 20% in the network. KKR’s offer for the network runs until November 8th, but does not exclude « a further extension until December 20th, » according to Telecom Italia, who intends to submit it to the board of directors « without delay. »
After months of suspense, TIM chose the offer from KKR at the end of June and entered into exclusive negotiations with them. However, KKR’s offer falls short of Vivendi’s expectations. Vivendi holds a 23.75% stake in Telecom Italia and had estimated the value of the fixed network at 31 billion euros.
If the Meloni government plans to spend a maximum amount of 2.2 billion euros, this project also involves the Italian infrastructure fund F2i, willing to pay around one billion euros for a 10% stake. In total, the participation of Italian investors should reach approximately 30%, leaving the majority to KKR. The state is already a shareholder of Telecom Italia through the 9.81% stake held by the Italian Deposits and Loans Fund.
This is a first in Europe.
If the operation is successful, it will mark the Italian government’s significant return to a group considered strategic. This group was privatized in 1997 by the Romano Prodi government. The nationalist government led by Giorgia Meloni has also stated that it intends to play a decisive role in defining strategic choices regarding TIM’s network. On Thursday, August 10th, the Italian government and the American investment fund reached an agreement regarding their joint offer to acquire the fixed network of Telecom Italia (TIM). Vivendi considered it a positive development. However, a source close to the French media giant warned that a discussion is now necessary to find the best solution for the company and all its shareholders, with Vivendi continuing to represent their interests with utmost determination.
Une première tentative avortée
KKR’s initial attempt to take control of Telecom Italia in April 2022 failed as Vivendi rejected their offer, deeming it too low. The fund, which currently owns a 37.5% stake in FiberCop, a portion of Telecom Italia’s network operator, had proposed 10.8 billion euros. The sale of its network is expected to help Telecom Italia reduce its massive debt of 26.2 billion euros.
However, the price of 1.8 billion euros paid by KKR for its stake in FiberCop should be deducted from the amount that the Italian operator will receive. KKR has committed to taking on approximately half of the operator’s approximately 40,000 employees in Italy, thus providing reassurance to the Meloni government, which is concerned about preserving these jobs, according to a financial source.
Certains analystes sont perplexes face à une transaction.
« I cannot reword »
« In the short term, selling off the network can address debt issues, but in the medium term, there is a complicated question to be resolved: how to differentiate oneself in a highly competitive market when one no longer controls the cost and quality of their infrastructure? » he continues.
The experts also warn that the transaction may involve certain risks. « From an industrial perspective, for a historical operator, their network is a key asset and it is dangerous to separate from it, » said Thomas Coudry, an analyst at Bryan, Garnier & Co, in an interview with AFP.