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Italy’s TIM, CDP sign preliminary accord on single network plan By Reuters


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© Reuters. FILE PHOTO: The Tim logo is seen at its headquarters in Rome, Italy November 22, 2021. REUTERS/Yara Nardi/File Photo

By Elvira Pollina

MILAN (Reuters) -Telecom Italia (TIM) and Italian state investor CDP have signed a preliminary agreement to combine the phone group’s fixed network assets with those of state-owned broadband rival Open Fiber, they said late on Sunday.

The long-awaited move aims to pave the way for the creation of a unified ultra-fast broadband network across Italy, as CEO Pietro Labriola works on a turnaround plan for TIM focused on a full-blown split of its landline grid from service operations.

The preliminary agreement was also signed by infrastructure funds Macquarie and KKR, which hold minority stakes, respectively, in Open Fiber and in TIM’s last-mile network unit.

KKR came round to joining the TIM-CDP project after former Italian phone monopoly TIM spurned a 10.8 billion euro ($12 billion) proposal by the U.S. fund to gain control of TIM and delist it before splitting its fixed and services assets.

Shares in TIM rose 4% in early trade as Italy’s blue-chip index gained 0.6%.

CDP, which is TIM’s second-largest investor with a 10% stake and owns 60% of Open Fiber, will control the combined network entity, TIM and CDP said, adding that the parties aim to negotiate a binding deal by the end of October.

Any binding agreement will be subject to the approval of national and EU antitrust authorities. TIM’s shareholders will also have to vote on the deal.

Italy is keen to create a single broadband network champion to avoid duplicating investments and to speed up a fibre optic roll-out and digitalisation of its economy.

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Under pressure for years in its hyper-competitive domestic market, debt-laden TIM is looking to raise money by hiving off its landline network, an asset analysts value at between 15 billion and 20 billion euros.

Options being discussed for the final structure of the deal with Open Fiber include also an outright sale of TIM’s fixed network, sources have said. The new network entity will take up a significant portion of TIM’s debt and domestic staff.

TIM and CDP had signed a preliminary agreement in 2020 but that plan, which envisaged TIM keeping a majority stake in the combined entity, ran aground due to political, regulatory and valuation issues.

($1 = 0.9298 euros)


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