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Optical/IP Networks

Vivendi remains awkward element in TIM's fixed ambitions

Telecom Italia (TIM) has recently been making progress with long-mooted ambitions to hive off its fixed-line network and merge it with state-backed Open Fiber to create a single fiber network provider for the Italian market.

Just this week, the Italian operator confirmed it signed a preliminary agreement that will allow it to press ahead with this plan. The non-binding deal was inked by state lender CDP Equity as well as US investor KKR and Macquarie Asset Management.

The price must be right for Vivendi to support the sale of TIM's fixed network. 
 (Source: M4OS Photos/Alamy Stock Photo)
The price must be right for Vivendi to support the sale of TIM's fixed network.
(Source: M4OS Photos/Alamy Stock Photo)

Subsequent reports suggested that TIM is seeking a valuation of around €20 billion (US$21.5 billion) for its fixed-line network and aims to use the proceeds to reduce debt and fund the turnaround plan being worked on by current CEO Pietro Labriola.

Italian media also speculated that CDP would hold a 70-77% stake in the combined fiber business, with KKR and Macquarie taking smaller shares.

A thorn in the side

As expected, French media giant Vivendi, which holds a 24% stake in TIM, has now waded into the debate. The group has long been a thorn in the side of TIM's management and looks set to continue in that vein.

For example, Vivendi CEO Arnaud de Puyfontaine has been briefing Italian media that the group would oppose a sale of TIM's fixed network that undervalues the asset.

In an interview with La Repubblica, de Puyfontaine conceded that the creation of a single network is the best option but warned that Vivendi would evaluate other options if the price is not right.


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Much of the interview is behind a paywall, but Reuters reports that de Puyfontaine said Vivendi "will never support the sale of the network at analysts' estimated value [of €17 billion-€21 billion] and this is in the best interest of TIM."

TIM watchers are well aware of Vivendi's power over the Italian group. Last year, for example, the media group questioned the role of former CEO Luigi Gubitosi following two profit warnings in three months.

A boardroom row ensued, and Gubitosi threw in the towel soon after. He was the Italian group's fourth CEO in only six years.

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— Anne Morris, contributing editor, special to Light Reading

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