As part of a government-backed plan to reorganize the former phone monopoly, U.S. firm KKR (KKR.N) is getting ready to submit a billion euro offer for Telecom Italia’s (TIM) (TLIT.MI) landline infrastructure by a deadline on Sunday, according to individuals familiar with the situation.
The centerpiece of TIM CEO Pietro Labriola’s plan to reconfigure the firm, which is saddled with 26 billion euros ($27.6 billion) in net debt, and to give the surviving services division a fresh start after being severely impacted by price competition in its home market, is an agreement with KKR.
According to the sources, the final offer is anticipated to be roughly in line with KKR’s first proposal, pricing Netco — a partnership made up of TIM’s fixed access network and submarine cable company Sparkle — at around 23 billion euros when including certain variable components.
According to the sources, that sum will probably include around 10 billion euros in debt and a payment of up to 2 billion euros related to a potential future merger with state-backed fiber-optic provider Open Fiber. According to the sources, the KKR offer calls for NetCo to hire nearly half of TIM’s 40,000 domestic employees. This is in keeping with the company’s previously stated goals.
The right-wing government of Prime Minister Giorgia Meloni essentially approved the sale when it gave the Treasury permission to join KKR’s offer for TIM’s grid, an asset regarded to be of critical national significance.
As part of a deal with KKR reached in August, the Treasury intends to acquire a 15-20% share in the NetCo firm for a maximum total cost of 2.2 billion euros. According to a different source, the Italian infrastructure fund F2I also seeks to participate in the purchase. It will invest approximately 1 billion euros, bringing the total interest held by Italians to about 30%.
According to the sources, the Treasury and F2I will probably enter the arrangement later before it is finalized. A smooth sale transaction, however, depends on the support of TIM’s largest investor, Vivendi (VIV.PA), which has voiced strong concerns about the sale price as well as the viability of the rump service company.
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