Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Italy's TIM, CDP eye preliminary deal on single network, sources say

Published 05/20/2022, 01:13 PM
Updated 05/20/2022, 01:16 PM
© Reuters. FILE PHOTO: Telecom Italia new logo is seen at the headquarter in Rozzano neighbourhood of Milan, Italy, May 25, 2016. REUTERS/Stefano Rellandini

© Reuters. FILE PHOTO: Telecom Italia new logo is seen at the headquarter in Rozzano neighbourhood of Milan, Italy, May 25, 2016. REUTERS/Stefano Rellandini

MILAN (Reuters) - Telecom Italia (BIT:TLIT) (TIM) is eyeing a preliminary agreement with state lender CDP over a long-held plan to merge TIM's network assets with those of state-backed rival Open Fiber as early as next week, two sources said on Friday.

Under pressure for years in its hyper-competitive domestic market, debt-laden TIM last month started formal talks with CDP to revive a plan to create a single broadband network champion.

Negotiations came at a time when TIM CEO Pietro Labriola, who took the helm of the company in January, is working on a proposal to break up TIM's operations in a bid to unlock value and pursue M&A deals.

Under such a plan, Labriola said the former phone monopoly was open to relinquishing control of its network infrastructure, seen as a way to ease a merger deal with Open Fiber.

As part of the overhaul, most of TIM's network assets would be carved out into a separate unit, called NetCo, which would take up a significant portion of the company's debt and domestic staff.

The sources said TIM and CDP are finalising a draft of a framework agreement which could be discussed at a Telecom Italia board meeting scheduled for May 26, cautioning the non-binding agreement could still be delayed.

Italy is keen to create a single network champion to avoid duplicating investments and speed up fibre optic roll across the country.

Treasury-controlled CDP, which is TIM second largest investor with a 10% stake and holds a 60% stake in Open Fiber, aims to get full control of the combined network entity, sources have previously said.

Infrastructure funds Macquarie and KKR, which hold minority stakes in Open Fiber and TIM's grid respectively, have also been involved in discussions as their support would be key for any plan to go through.

KKR, which spent 1.8 billion euro to buy a 37.5% stake in Telecom Italia's last mile network unit FiberCop and attempted a failed takeover approach for the whole of TIM, has expressed concerns over potential future regulatory and valuation issues related to the single network plan.

© Reuters. FILE PHOTO: Telecom Italia new logo is seen at the headquarter in Rozzano neighbourhood of Milan, Italy, May 25, 2016. REUTERS/Stefano Rellandini

But a source familiar with the matter said the fund would not oppose the framework agreement.

(This story refiles to fix reference to Macquarie and KKR in paragraph 9)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.