TIM asks for more money for networks business

TIM wants its various suitors to improve on their offers for its networks business and is giving them another month to do so.

Mary Lennighan

March 16, 2023

3 Min Read

TIM wants its various suitors to improve on their offers for its networks business and is giving them another month to do so.

The Italian incumbent’s board of directors met on Wednesday to discuss the most recent offer for the NetCo unit, that was tabled by Cassa Depositi e Prestiti (CDP) and Macquarie 10 days ago. We don’t know how much the pair offered, but we now know that TIM wants more.

And, as we already suspected, it is also looking to rival bidder KKR, which effectively served as a stalking horse when it lodged a non-binding offer – also of undisclosed value – of its own last month, to add more euros to the pot.

TIM said its directors appreciate the bid from the CDP/Macquarie consortium. “However, the Board does not consider it – like KKR’s NBO [non-binding offer] – to reflect the value of the asset and TIM’s expectations,” the operator said in a statement, on conclusion of the board meeting.

“Consequently, in line with what occurred in the context of KKR’s NBO, in order to facilitate the alignment of the terms of the proposed transaction with the strategic framework relevant for TIM, the Board has resolved to make available to the Consortium – on a non-exclusive basis – certain specific information and to request the further indications in order to fully understand the assumptions and economics of the Consortium’s NBO,” it said.

Essentially, that means it plans to divulge more information to CDP and Macquarie with the aim of helping them to make a bigger offer, just as it has already done with KKR.

It hopes both of them will submit, in its own words, “a non-binding improved offer” by 18 April.

The price tags being placed on the NetCo business – which will eventually house TIM’s fixed-line assets, its FiberCop fibre-to-the-home (FTTH) unit, and international wholesale operator Sparkle – are still conjecture at this stage, but there seems to be broad agreement among the newswires and the Italian press.

The KKR offer and that of CDP/Macquarie are believed to be broadly similar, at around the €20 billion mark, but with the CDP/Macquarie offering more liquidity. We have also heard repeated many times that TIM itself wants up to €25 billion for NetCo, while shareholder Vivendi values the operation at around €31 billion.

We’re unlikely to have any concrete information on that score until next month’s bid deadline at the earliest, but in the meantime there will doubtless be further speculation to keep us entertained.

Furthermore, there’s also a new networks rumour in Italy to keep industry watchers busy over the coming weeks.

Wind Tre is in advanced talks with Swedish private equity firm EQT regarding the spin-off and sale of its networks business, Il Sole 24 Ore Radiocor reported, citing unnamed sources. It’s not immediately clear how much of the business would be affected, but the financial news agency says EQT could take a majority holding.

Wind Tre has already offloaded its passive infrastructure via parent company CK Hutchison’s €10 billion European towers mega-deal with Cellnex, the Italian portion of which closed in July 2021. But it has an extensive mobile network, and is clearly considering its options for monetising that.

But the rumours have already incurred the ire of the trade unions, with SLC CGIL, Fistel CISL and UILCOM having requested an urgent meeting with Wind Tre, according to Radiocor. The unions are concerned about the impact structural separation could have on thousands of employees. The news agency’s sources say that a network spin-off should not affect headcount, but the unions insist they will take any action they deem appropriate to protect the whole of the telco’s existing workforce.

Given the recent reports of job cuts at Vodafone Italia and Sky, it’s unsurprising that the unions look set to wade in here. Similarly, with TIM’s NetCo separation and sell-off inching ever closer to completion, it will be a busy time for all those involved in telecoms employment in Italy in the coming months.

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About the Author(s)

Mary Lennighan

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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