The board of directors of Telecom Italia (TIM) yesterday approved the offer to sell its fixed network to the American fund KKR without waiting for the approval of the shareholders' meeting and despite the opposition of the main shareholder, the Frenchman Vivendi. The operation is valued at up to 22,000 million euros.
The decision, one of the most important in the history of the telecommunications company, was made after three days of meetings and went ahead thanks to the favorable vote of 11 board members, while three others voted against. KKR estimates that TIM's fixed network is worth 18.8 billion, an amount that could increase to 22 billion in the event of a merger with Open Fiber.
It is estimated that the operation, which Telecom expects to close in the summer of 2024, will allow the company to reduce its debt by 14 billion euros, according to the statement. However, the board did not approve KKR's offer for Sparkle, Telecom's submarine cable unit, and extended until December 5 the deadline to verify the possibility of a higher offer.
In addition to the American fund, the new telecommunications company will have as shareholders the Italian Ministry of Economy and Finance - which has already announced its participation in the company and will now have a stake of around 20% - and the Italian fund F2i. The decision marks a victory for CEO Pietro Labriola, the main architect of the network's sale plan, and allows the Italian state to continue overseeing an asset considered strategic for the country.
Labriola commented that two years of "hard" work have culminated in "a historic decision" that will lead to the birth of two companies that will mark "the benchmark for the digital transformation" of Italy. In this sense, he has argued that the operation will allow "accelerating technological development" in the telecommunications sector. "We allow the new TIM to focus on the technological innovation necessary to govern the complex digital services market and play a leading role," he said.
For its part, Vivendi, which controls 23.75% of the shares with 17% of the voting rights, has announced that "it will use all legal means at its disposal to counteract the decision and protect its rights and those of all shareholders", while describing the operation as illegitimate. The French group has long opposed Labriola's plans to divest the network, TIM's most valuable asset.
The Italian telecom has been trying to sell its fixed network for months. Although the company is privately owned, the Meloni and Mario Draghi governments have played a key role in crafting an agreement that would enable the government to maintain its influence. After the failure of different options, the Executive supported KKR's plan and prepared funds to invest directly in the company to maintain control.
Getting the green light from the board became even more complicated late last month, after London investment firm Merlyn Advisors, with a less than 1% stake in the telco, unveiled a surprise plan to halt the sale and replace to Labriola. A proposal that gained the support of Vivendi, which has been asking for at least 30 billion euros to sell the asset.
In a statement following the board's decision, Merlyn explained that he will take legal action to stop the operation with KKR and has called a shareholders meeting.
