2023-09-14 14:21:00
The operation is complex, and they apparently need more time. The American fund KKR and the Italian government have requested additional time to submit their offer for Telecom Italia’s fixed Internet network. This is what the daily reported this Wednesday The Republic. The announcement slightly lowered the stock price of the historic transalpine operator. KKR and the Italian Ministry of Economy and Finance normally have until September 30 to make their proposal – knowing that they entered into exclusive negotiations with Telecom Italia at the end of June. But the timing appears too tight. KKR and the executive must formally request additional time at the operator’s next board of directors, on September 27.
According to The Republic, KKR has not yet completed the financing of the operation. The Ministry of Economy and Finance, for its part, “awaits the green light from the Court of Auditors and the competition authorities”, specifies the daily. The staff of Telecom Italia is, for its part, working on contracts which will secure the operator’s access to the new company which will own the fixed Internet network and its submarine cable subsidiary Sparkle.
A network considered strategic
At the end of August, the Italian government gave the green light to the State’s entry into the capital of Telecom Italia’s fixed Internet network, as part of a joint offer with KKR. Concretely, the State’s participation must amount to a maximum of 2.2 billion euros. This minority stake will allow it to have a say in the future of this network, an asset considered eminently strategic for the country and its digital economy.
KKR had previously put 23 billion euros on the table. That said, this amount is lower than the expectations of Vivendi, the French media giant and largest shareholder of Telecom Italia, which estimates its value at 31 billion euros. Vincent Bolloré’s group, however, was open to negotiations, describing KKR’s offer as “positive news”.
Telecom Italia wants to reduce its debts
Telecom Italia sees this operation as an opportunity to reduce its debts, which currently exceed 26 billion euros. But this deal will have serious consequences. Once signed, the operator will essentially no longer be a service operator, since it will no longer have control over its precious fixed Internet network. This would be a first for a historic operator on the Old Continent. The operation should also make it possible, more broadly, to accelerate fiber coverage in the country. Italy is far behind in this area, and Telecom Italia, which suffers from strong competition, no longer has the means to invest sufficiently in this technology.
The sale of its network to KKR and the State will pave the way for consolidation in the telecoms infrastructure market. Among the preferred scenarios, the new company owning the Telecom Italia network might merge with Open Fiber, which has a nationwide fiber network. Open Fiber is today controlled by the State, which owns 60% of the capital via the Italian Caisse des Dépôts (CDP). It is also, moreover, the second largest shareholder of Telecom Italia, with 9.8%. This operation would create a structure allowing the deployment of a large and single fiber network on a national scale, to which all the country’s operators, such as Iliad Italia or Vodafone, would have access to provide very high-speed Internet to their customers.
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