At a Glance:
- Telecom Italia has started officially talking with KKR on the proposal.
- KKR is working on securing the control of Telecom Italia, a former telecom monopoly in the industry.
- The Italian government has taken no formal stance in this proposal.
Telecom Italia has confirmed that it will start official talks with the KKR to assess the U.S. funds. The fund is estimated to be around $11.8 billion for Italy’s biggest phone group. These talks emerged after approaching the company for four months.
Although, the Telecom Italia team stated that it would also explore a possible tie-up with state-backed broadband rival Open Fiber as it pursues an in-house revamp Pietro Labriola, the new CEO presented in early March.
KKR to secure control Telecom Italia
Telecom Italia underlines that “Discussions with KKR to assess ‘the attractiveness and deliverability’ of its proposal would also seek to define the ‘length and scope’ of confirmatory due diligence the private equity firm had requested before formalizing its non-binding bid.”
KKR wants to secure control of the former phone monopoly, which is under debt. KKR aims to delist it and attempt to relaunch it by carving out its network infrastructure assets. This has been confirmed from the sources previously when the acquisition news was making rounds.
Italia Government has yet to take a stance
The new CEO of Telecom Italia had deemed KKR’s initial offer as too low and is working on a plan to revive the company. Pietro Labriola is planning to center on separating network assets from Telecom Italia’s service arm. The company also highlighted, “The board also confirmed the conviction there is hidden value in TIM … which must be taken into due consideration when assessing any alternatives to the business plan.”
Telecom Italia stated that Pietro and Salvatore Rossi, the Chairman, will be holding formal talks with KKR, to gather more detail on the proposals. In recent years, Telecom Italia has witnessed falling revenue and shrinking margins amid the rising competition in its core domestic market. The company recorded a record low sales in 2021 and then Pietro unveiled the revamp plan.
The Italian government is yet to take an official stance on the KKR’s proposal. The government has been shielding companies of strategic relevance for the country such as Telecom Italia from unwanted foreign interest.
