© Reuters. FILE PHOTO: The Telecom Italia logo for the TIM brand is seen on a building in Rome, Italy, April 9, 2016. REUTERS/Alessandro Bianchi
By Elvira Pollina and Giuseppe Fonte
MILAN (Reuters) – Italian state investor CDP called a board meeting on Sunday where it is expected to approve a long-delayed non-binding offer for the former phone monopoly’s fixed network. Telecommunications Italy (BIT:), said three sources close to the matter.
CDP has partnered with Australian infrastructure fund Macquarie in the bid for Italy’s most important telecommunications infrastructure, which would compete with that submitted by US investment firm KKR.
In recent weeks, sources told Reuters that CDP and Macquarie were ready to value TIM’s network at around 18 billion euros ($19 billion), including about 6 billion euros of debt.
The joint offer would also include Telecom Italia’s smaller rival, Open Fiber, in which CDP and Macquarie are co-investors, according to the same sources.
KKR’s proposal, which values TIM’s network at around €20 billion including debt and €2 billion of profits, has given new impetus to efforts to modernize TIM after lengthy talks between the government and TIM’s two main shareholders, CDP and France’s Vivendi (OTC:) , yielded no results.
Giving up control of the network to reduce 25 billion euro debt and get rid of half of TIM’s 40,000 domestic employees is a key element of Chief Executive Pietro Labriola’s push to revive the group.
Prime Minister Giorgia Meloni has repeatedly said her government wants to gain control of TIM’s network infrastructure while protecting jobs, but within her administration there is no common ground on how to achieve that goal.
An offer from CDP and Macquarie leaves several scenarios open, two government officials said, without elaborating.
Vivendi, whose support is necessary for any deal to go through, has set a price of 31 billion euros for TIM’s most valuable asset.
TIM has already said KKR’s proposal “does not fully reflect” the value of its asset and said it would seek an improved offer by the end of this month.
In its non-binding offer for a controlling stake in TIM’s network, KKR has left the door open to involve a state entity as a minority shareholder, but opposes CDP playing that role due to antitrust concerns, the sources said.
Meloni’s predecessors, Mario Draghi and Giuseppe Conte, have backed plans to combine TIM’s and Open Fiber’s networks, but valuations and regulatory issues thwarted the efforts.
($1 = 0.9406 euros)
