In a resolute move, the Italian government has affirmed its commitment to a proposed deal in which Telecom Italia would sell its network grid to the U.S. investment firm KKR, despite the emergence of a competing strategy for the telecommunications company.
A government source made it clear on Saturday that “any other initiative is not part of the government’s intentions,” referring to an alternative plan presented by a London-based investment company late on Friday.
KKR has submitted a binding offer for Telecom Italia’s (TIM) primary network infrastructure, valuing it at approximately 23 billion euros ($24 billion), inclusive of debt and certain variable components.
The TIM board is set to evaluate this offer, which plays a pivotal role in the company’s endeavors to alleviate its substantial debt burden, during meetings scheduled for November 3 and November 5.
Prime Minister Giorgia Meloni’s government has given its effective endorsement to KKR’s approach by authorizing the Treasury to acquire a 15-20% stake in TIM’s grid for up to 2.2 billion euros, in collaboration with the U.S. fund.
The source emphasized that the government “has made other decisions that envisage another plan,” clarifying that this is the sole proposal with which it is engaged.
KKR’s plan had faced opposition from Merlyn Advisors and a former senior executive at TIM, who jointly submitted a letter dated October 27 to TIM’s board of directors. Merlyn Advisors represents shareholders owning less than 3% of TIM.
In their alternative proposal, TIM would retain its entire fixed network business, as well as its cloud and digital services operations, while divesting its domestic retail business and its prized Brazilian unit to alleviate its substantial debt load.
Furthermore, the KKR deal has encountered significant reservations from TIM’s largest shareholder, the French media group Vivendi.
The Italian government’s unwavering support for the KKR deal underscores the ongoing developments in the telecom industry and the company’s strategic efforts to address its debt challenges.
