(Added MIT statement to paragraphs 7 and 8) by Giuseppe Fonte
The Italian government said on Saturday it still supports Telecom Italia’s (TIM) TLIT.MI proposed deal to sell its network to U.S. fund KKR KKR.N after a rival plan for the telecoms group emerged.
“Any other initiative is not part of the government’s intentions,” a government source said, referring to an alternative strategy proposed Friday by a London-based investment firm representing shareholders holding less than 3% of TIM.
KKR has made a firm offer for TIM’s core network infrastructure that values it at around 23 billion euros ($24 billion), including debt and some variable items.
TIM’s board is due to consider the offer, which is at the heart of the company’s efforts to reduce its huge debt, at meetings scheduled for November 3-5.
The government effectively approved KKR’s approach, authorizing the Treasury to take a 15-20% stake in TIM’s network for up to €2.2 billion, alongside the US fund.
In response to the alternative strategy, the source noted that the government “has (already) made other decisions that consider another plan”, adding that KKR’s offer was the only proposal in which it was involved.
In a statement on Saturday, TIM said the rival document would be submitted to its board of directors at its Nov. 3 meeting, once the ownership of the company behind it had been verified.
She stressed, however, that preparatory work for the consideration of KKR’s offer was continuing and that it would be discussed as planned at future board meetings.
TIM’s strategy was challenged by Merlyn Advisors and a former senior TIM executive in a letter dated October 27.
Under their alternative plan, TIM would retain all of its fixed network businesses as well as its digital and cloud services businesses, while selling off its domestic retail operations and its highly prized Brazilian unit.
The KKR deal was also subject to significant reservations from TIM’s main investor, French media group Vivendi VIV.PA