TIM to set clock ticking on Italy single network with KKR deal Monday

TIM to set clock ticking on Italy single network with KKR deal Monday

Reuters  | Aug 30, 2020 16:40

TIM to set clock ticking on Italy single network with KKR deal Monday

By Stephen Jewkes, Elvira Pollina and Giuseppe Fonte

MILAN/ROME (Reuters) - Telecom Italia (MI:TLIT) (TIM) TLIT.MI is set to sign off on a landmark deal with U.S. fund KKR KKR.N on Monday that could lay the groundwork for plans to create a single ultrafast broadband network promoted by the Italian government.

Rome is keen to create a single full-fibre network to close Italy's digital divide with other European countries and wants TIM to merge assets with smaller state-backed rival Open Fiber to create a national champion eligible for grants from Europe's Recovery Fund.

Earlier this month, TIM postponed to Aug. 31 a decision to sell 37.5% of its last-mile grid, FiberCop, to KKR for 1.8 billion euros ($2.1 billion) after the government asked for more time to broker the broad network agreement roping in Open Fiber.

But on Thursday the ruling coalition gave the go ahead to a Memorandum of Understanding setting out a road map for the creation of a high speed broadband network open equally to all operators and, crucially, acceptable to regulators. (Full Story)

"The last-mile deal with KKR is the launching pad for the much bigger deal further down the road," said a source involved in the process.

Industry Minister Stefano Patuanelli said on Saturday such an infrastructure could be eligible for 6 billion euros of EU Recovery Fund money.

TIM and Open Fiber have been talking for over a year about ways of combining their assets, but negotiations have foundered on governance and regulation.

Former phone monopolist TIM wants majority control of any single network while Open Fiber insists it should be wholesale only and not under the control of an incumbent with a big retail business like TIM.

Under the government plan, TIM could initially own more than 50% but will not have a majority of board members and the final say on strategic issues will lie with state-lender CDP.

All market players should have equal access to the unified broadband network and its ownership structure should be open to newcomers, sources said.

CDP, which jointly controls Open Fiber with utility Enel (MI:ENEI) ENEI.MI, is TIM's second-biggest shareholder after Vivendi (PA:VIV) VIV.PA. It controls Italy's gas and power grids Snam SRG.MI and Terna TRN.MI.

Besides the deal with KKR, TIM's board on Monday will give its backing to the government's MoU, sources said, while TIM, KKR and CDP are set to negotiate an option for CDP to enter FiberCop capital.

At a later stage, and subject to prior regulatory clearance, the plan is to merge FiberCop and Open Fiber. TIM would then fold its primary network, connecting switching centres to street cabinets, into FiberCop, giving the new player the entire fixed-access network.

A source said CDP had also called a board on Monday to endorse the blueprint.

Enel is not expected to sign the MoU but sources said its CEO was onside with government plans.

The state-controlled utility will sell part of its stake to CDP to guarantee state control and can then sell the rest to whoever, a source close to the matter said.

© Reuters. Telecom Italia's logo for the TIM brand is seen on building roof downtown Milan

Infrastructure fund Macquarie has already made a non-binding bid for all or part of Enel's stake in Open Fiber valuing the whole group at almost 8 billion euros including debt. It is expected to table a binding offer in September, sources said.

Related News

Latest comments

Add a Comment
Please wait a minute before you try to comment again.
Write a reply...
Please wait a minute before you try to comment again.

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.

English (USA) English (India) English (Canada) English (Australia) English (South Africa) English (Philippines) English (Nigeria) Deutsch Español (España) Español (México) Français Italiano Nederlands Português (Portugal) Polski Português (Brasil) Русский Türkçe ‏العربية‏ Ελληνικά Svenska Suomi עברית 日本語 한국어 简体中文 繁體中文 Bahasa Indonesia Bahasa Melayu ไทย Tiếng Việt हिंदी
Sign out
Are you sure you want to sign out?
Saving Changes


Download the Investing.com App

Get free real time quotes, charts and alerts on stocks, indices, currencies, commodities and bonds. Get free top of the line technical analysis/predictors.

Investing.com is better on the App!

More content, faster quotes and charts, and a smoother experience is available only on the App.