by Elvira Pollina and Giuseppe Fonte
MILAN (Reuters) – The board of Italy’s Caisse des Depots (CDP) on Sunday approved a non-binding offer to buy the fixed network of former telephone monopoly Telecom Italia (TIM) valid until March 31.
CDP has teamed up with Australian fund Macquarie to try to get its hands on TIM’s landline network and submarine cable unit Sparkle, for which US fund KKR has already applied.
In recent weeks, sources told Reuters that CDP-Macquarie and KKR had both set an enterprise value of 18 billion euros for TIM’s network.
The CDP and Macquarie project would also involve TIM’s rival fiber optic network, Open Fiber, owned by CDP and Macquarie and which would eventually be integrated into TIM’s network.
KKR’s proposal, which amounts to 20 billion euros if we take into account an additional price of 2 billion, relaunched the restructuring efforts of TIM after the failure of long discussions between the government and the two main shareholders of the company, namely the CDP and the French Vivendi.
The two bids in the running are below the 31 billion euro price Vivendi has set to back the sale of the network, for which TIM itself has announced a value of 25 billion.
TIM said on Sunday it planned to consider CDP-Macquarie’s offer from March 15.
On February 24, the group indicated that KKR’s proposal did not “fully reflect” the value of its assets and added that it would try to obtain a more advantageous proposal by the end of the month.
The deal, which aims to reduce TIM’s 25 billion euro debt and halve its national workforce by some 40,000 jobs, is one of the main elements of chief executive Pietro Labriola’s strategy to reshape the group .
Italian Council President Giorgia Meloni’s government has repeatedly said it wants to gain control of the TIM network while protecting jobs.
Under Italian rules, Rome has the power to block any bid on strategically important assets such as TIM’s network.
CDP’s offer is welcome because it makes the sale process more transparent but it leaves several scenarios open, said a government source.
In its approach, KKR has left the door open for a public entity to be involved as a minority shareholder in TIM’s network, but objects to CDP playing that role due to antitrust concerns.
(French version Kate Entringer and Benjamin Mallet)
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