The carrier could sell its stake in towerco Inwit in addition to pending Sparkle sale
Telecom Italia (TIM) is contemplating selling assets worth around €1 billion to further reduce its debt, according to Bloomberg (subscription), citing people familiar with the matter. In addition to the already planned sale of wholesale arm Sparkle – which would feth in the region of €600 million to €800 million – the carrier may dispose of its remaining stake in mobile tower operator Inwit, valued at around €300 million.
According to the report, a deal for the Inwit holding is not imminent and may not happen until 2026. The operator is under increasing pressure following its higher-than-expected debt forecast for the end of 2024. The operator said it will be able to meet its multi-year guidance even if its debt rises this year after the deal to sell off its fixed-line network closes.
The newest disposal would help TIM raise cash, which could then be used either to further cut debt or to remunerate shareholders, the people said.
Earlier this week, TIM CEO Pietro Labriola reportedly warned investors the company could need to raise billions in capital if the planned sale of its network to KKR collapses, according to Reuters. At a meeting with investors, held last Friday, Labriola said TIM expects to gain necessary approvals to complete the sale to KKR this summer but when pressed on what happens if the deal falls through, he answered that the operator would need to reduce spending drastically or seek fresh capital to sustain planned investments. KKR last week separately confirmed that the deal is set to close in the summer.
Given the recent share slump following the operator’s 2024 debt forecasts, the pressure is piling on the chief executive ahead of a shareholder vote next month over whether to hand him another mandate. Although the KKR deal is backed by the government, Vivendi – which is TIM’s tope investor – could potentially raise issues around a reappointment given it is opposed to the deal.
However, the stakes are high for Vivendi too as any alternative successor to Labriola would still need to finalise the KKR deal, or else expose TIM to penalties under the accord it sealed with the US fund, one of the sources told Reuters.
“Telecom Italia is expected to return to generating cash at group level, as well as in its domestic Italian market, thanks to our new three-year business plan,” Labriola told daily Corriere della Sera in an interview over the weekend.