Telecom Italia faces $12.2B privatization bid from KKR

Shareholder Vivendi is said to oppose the offer, rating it too low.

Anne Morris, Contributing Editor, Light Reading

November 22, 2021

3 Min Read
Telecom Italia faces $12.2B privatization bid from KKR

It was only recently reported that US-based investors KKR wanted to invest more in the fixed-line network of Telecom Italia (TIM) after already having bought a 37.5% stake in TIM's fiber company FiberCop last year.

It now seems that KKR wants to buy up TIM in its entirety and take it private, at a cost of €10.8 billion (US$12.2 billion). TIM also has net debt of about €22.5 billion ($25.4 billion) that any buyer would have to take on.

According to a statement from TIM itself, its board of directors met up yesterday to discuss the "non-binding and indicative" intention of KKR to launch a possible public tender offer for TIM's entire share capital, "aimed at the delisting of the company."

Figure 1: Bargain hunting: Shareholder Vivendi is said to oppose the offer for TIM, rating it too low. (Source: Arcansel / Alamy Stock Photo) Bargain hunting: Shareholder Vivendi is said to oppose the offer for TIM, rating it too low.
(Source: Arcansel / Alamy Stock Photo)

TIM said KKR had set an indicative price of €0.505 for its possible buyout offer – which Reuters noted is a 45.7% premium to the closing price of ordinary shares on Friday.

The news caused TIM's shares to rise sharply at the start of trading on Monday morning. TIM pointed out that the operator is subject to the so-called "golden power" of the government to veto any deal.

Board unrest

It's fair to say that TIM has been facing ructions of late. For example, French media giant Vivendi, which holds a 24% stake in TIM, had questioned the role of CEO Luigi Gubitosi following two profit warnings in three months. Indeed, Vivendi has reportedly been unhappy with TIM's recent performance and that of Gubitosi.

As things stand, it's not clear what TIM thinks of KKR's proposal. Reuters, citing unidentified sources, said KKR's plan is to see TIM carve out its fixed network to be run as a government-regulated asset along the model used by energy grid company Terna or gas grid firm Snam.

Want to know more? Sign up to get our dedicated newsletters direct to your inbox

To be sure, the operator could use a little help: It is struggling to compete against more nimble rivals such as Iliad Italia as well as Fastweb, Vodafone Italy and WindTre.

According to Reuters, Vivendi believes that KKR's offer does not adequately value TIM. It was also reported that private equity firms CVC and Advent have studied possible plans for TIM, working with former TIM CEO Marco Patuano, now a senior adviser to Nomura in Italy.

Related posts:

— Anne Morris, contributing editor, special to Light Reading

Read more about:


About the Author(s)

Anne Morris

Contributing Editor, Light Reading

Anne Morris is a freelance journalist, editor and translator. She has been working in the telecommunications sector since 1996, when she joined the London-based team of Communications Week International as copy editor. Over the years she held the editor position at Total Telecom Online and Total Tele-com Magazine, eventually leaving to go freelance in 2010. Now living in France, she writes for a number of titles and also provides research work for analyst companies.

Subscribe and receive the latest news from the industry.
Join 62,000+ members. Yes it's completely free.

You May Also Like