KKR steps in with bid for Telecom Italia’s grid

By Elvira Pollina

MILAN (Reuters) – Telecom Italia (BIT🙂 (TIM) has obtained a non-binding bid for a controlling stake in its fixed-line community from U.S. fund KKR, and Italy’s greatest telephone group stated its board would meet once more later this month to evaluate the proposal.

KKR’s transfer comes amid fruitless talks over the way forward for TIM between the federal government and the group’s main traders, Vivendi (OTC:) and Italian state lender CDP.

After a gathering on Thursday over KKR’s strategy, TIM stated its board would regroup on Feb. 24 to determine over the proposal, with out offering particulars over its phrases.

A supply near the matter stated the supply valued the landline “north of” 20 billion euros ($22 billion).

Furthermore, the previous monopoly stated it remained open to any different might emerge within the meantime. Sources acquainted with the matter advised Reuters CDP nonetheless plans to advertise a bid for TIM’s for TIM’s infrastructure.

Shares in TIM closed up by 9.5% after rising as a lot as 14% earlier.

TIM stated the scale of the stake sought by KKR was but to be outlined, however the transfer would end result within the U.S. firm taking management of a newly created entity comprising TIM’s home landline community in addition to a stake in submarine cable unit Sparkle.

KKR, which is already an investor in TIM’s community, made a non-binding takeover supply for the group as a complete late in 2021 which TIM ultimately rejected.

Ceding management of TIM’s prized landline community is a key plank of Chief Government Pietro Labriola’s technique to revamp the group and lower its 25.5 billion euro debt pile.

TIM wants to speculate closely to improve its ageing community, and would focus as a substitute on growing its providers enterprise underneath Labriola’s plans. However progress on these proposals has hit a wall attributable to variations amongst high shareholders Vivendi and CDP.

KKR’s strategy coincides with TIM wanting into curbing the quantity invested in switching from to fibre, which might doubtlessly put KKR’s returns in danger, a supply near with the matter stated.

STRATEGIC ASSET

As Italy’s greatest important telecoms infrastructure, the community is deemed strategic by the federal government which may block undesirable curiosity underneath so-called golden powers guidelines.

KKR advised Italy’s right-wing administration of its intention, a senior authorities supply advised Reuters, including that Rome stood by plans to make sure TIM’s community is managed by the state.

The business ministry stated on Thursday the federal government was monitoring the scenario. “The federal government sees the safeguarding of employment ranges and the safety of a strategic infrastructure such because the nationwide telecommunications community as key points”, the ministry stated in a press release.

Beneath Labriola’s plans to separate providers and infrastructure operations, practically a half of TIM’s 40,000 workers in Italy would observe the community as would as a good portion of the corporate’s debt.

The plans have stalled as Vivendi has locked horns with state-backed CDP over the worth of the community, for which Vivendi has sought a 31 billion euro valuation.

Vivendi declined to touch upon KKR’s transfer. The French group owns 24% of TIM but it surely has no representatives on the board after CEO Arnaud de Puyfontaine give up his seat final month.

Vivendi has been crucial of what it sees as CDP’s battle of curiosity over TIM. CDP, which is TIM’s second greatest shareholder, can also be the primary investor in TIM’s fibre-optic rival Open Fiber and would look to mix the 2 corporations’ infrastructure belongings.

KKR, which has already invested 1.8 billion euros to purchase 37.5% of TIM’s last-mile community, has been cautious of CDP’s involvement due to the antitrust hurdles posed by the tie-up with Open Fiber, an individual with data of the matter stated.

Individually, one other supply near the matter stated KKR’s supply left the door open to doubtlessly involving one other public entity to develop into a shareholder within the community.

KKR had already approached Italy’s new authorities on the finish of final yr, expressing renewed curiosity for TIM’s community, sources advised Reuters in December. ($1 = 0.9106 euros)