Critics tell Meloni that deal is baloney
Telecom Italia (TIM) directors are meeting today (Thursday) to decide their response to multibillion bids for the phone company’s cable network infrastructure after apex investor, French media group Vivendi, questioned the TIM group’s strategy.
The sale of TIM’s fixed network and its submarine cable unit Sparkle was the main plank of CEO Pietro Labriola’s strategy to slash the company’s €25 billion ($27.6 billion) debt and revive the former phone monopoly’s struggling domestic business.
Rival investors, such as New York-based private equity giant KKR and the joint funds €21 billion from Italian government owned bank CDP and €19.3 billion from Australian private equity firm Macquarie, are circling. Each has made bids of €1 billion, say Reuters’ multiple inside sources. KKR’s bid includes a potential €2 billion payment based on future performance.
TIM is expected to rebuff offers, other Reuters sources have whispered, despite an impatient warning from stakeholder Vivendi for TIM to draw a line under the bidding process. Vivendi has complained of the chasm of expectations over the amount TIM should be paid.
KKR’s bid is seen as the stronger alternative on the back of a significant effort to improve the detailed terms of its offer beyond the headline figure, according to sources in TIM’s camp. However, both approaches for TIM’s most valuable asset fall a long way short of the €31 billion sought by Vivendi and also fell below market expectations.
Telecom Italia shares have fell by 21% since the suitors submitted the improved bids on April 18. French media giant Vivendi, which owns a 23.8% stake in TIM, has recently relinquished its seats on the board and is calling for changes in how the group is run in the face of an alternative plan with the Italian government.
Italian president Giorgia Meloni has said in the past that her administration will not intervene at this stage in the network sale process, but she is thought to be keen to avoid risking any deal that is nothing in the national interest.