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TIM's board of directors have declared the offer tabled by the Italian government for subsea cable business Sparkle unsatisfactory, and charged CEO Pietro Labriola with the task of renegotiating.
February 8, 2024
The Italian incumbent announced on Wednesday afternoon that it was looking for a better offer, just a week after the Ministry of Economy and Finance made its first bid for Sparkle. That bid, of unknown size, was not the only item on the agenda at Wednesday's board meeting – the composition of the board itself is also up for debate – and there had been speculation that the directors would not come to a firm decision immediately.
Clearly the bid did not give the directors too much to think about after all. So it's back to the drawing board for the state and for Labriola.
As has been the case throughout this somewhat tortuous saga of the TIM networks sale, the telco is being miserly with the details, so we can't say for sure what its issue is with the government offer.
It's probably about the money. But it's also about the structure of the potential deal.
Specifically, TIM said its board had "mandated the CEO, Pietro Labriola, to negotiate with MEF a different option, with possible adjustments to the contractual terms, in the assumption that TIM maintains a stake in the company for a certain period of time and supports the implementation of the strategic plan."
TIM raised the prospect of a different option, expressed in almost exactly those terms, last week. The only real difference is that it is now asking for an alternative on the "assumption" that it retains a stake in Sparkle, as opposed to "in the event that," which perhaps suggests that it has now decided that that is exactly what it wants.
There is reportedly a sizeable gap between TIM's valuation of Sparkle and what the state is willing to pay, which is hardly a surprise. According to various Italian press reports, the telco rejected a €750 million offer at the back end of last year, but the ministry found another €100 million before it submitted its new bid. But with the telco valuing Sparkle at over €1 billion, there is still ground to make up.
A different deal structure, including TIM retaining a stake in Sparkle, might well help to bridge that gap, one way or another.
We will have to wait for a new offer to land to find out, presuming Labriola is able to secure one.
In the meantime, it's business as usual for Sparkle, which earlier this week announced the expansion of its international network footprint into Iraq for the first time, with the opening of a new PoP in Erbil. The firm is working with Iraqi connectivity and ICT solutions provider Novel Point to provide Internet connectivity services to Iraq and neighbouring markets.
At least the debate over its future ownership isn't distracting Sparkle from its day job.
Speaking of jobs, the second half of TIM's announcement on Wednesday provided an update into upcoming changes at board level. Current TIM chairman Salvatore Rossi, who will step down later this year, presented a proposal regarding the selection of candidates for the board and got the green light from his fellow directors. We don't know much more than that at this stage though.
What we do know is that whatever the composition of the new TIM board, with potentially fewer directors than it has now, and whoever is in the chair, there are some big decisions to be made in the near future.
Mary has been following developments in the telecoms industry for more than 20 years. She is currently a freelance journalist, having stepped down as editor of Total Telecom in late 2017; her career history also includes three years at CIT Publications (now part of Telegeography) and a stint at Reuters. Mary's key area of focus is on the business of telecoms, looking at operator strategy and financial performance, as well as regulatory developments, spectrum allocation and the like. She holds a Bachelor's degree in modern languages and an MA in Italian language and literature.
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