Apex investor says TIM is undervaluing its infrastructure
The sale of Telecom Italia’s (TIM) fixed network could be blocked by its apex investor, French media group Vivendi, which says that the telco’s infrastructure assets are being sold off too cheaply.
Arnaud de Puyfontaine, the CEO of the French media group, said Vivendi would be ready to assess other options rather than a cheap sell off that undermines the value of the investor’s stock. “I want to be clear on the subject of the value of the network,” de Puyfontaine toldn Italian newspaper la Repubblica in an interview published on Wednesday. “Vivendi will never support the sale of the network at analysts’ estimated value [between €17-21 billion] and this is in the best interest of TIM.”
TIM and Italy’s publicly owned merchant bank Cassa Depositi e Prestiti (CDP) formally committed to a plan on Sunday to create a domestic broadband champion. The scheme would compel TIM to spin off its landline grid before it is merged with the network of broadband rival Open Fiber, which is owned by CDP.
“If the real value (of TIM’s network) is not recognised, given we are a long-term industrial investor, we are ready to evaluate other opportunities,” de Puyfontaine said. “Tim’s governance needs to be improved to protect the market and we hope it will happen soon,” said de Puyfontaine.
TIM had priced its assets at 20 billion including debt on the landline grid, said two of Reuters’ sources.
De Puyfontaine argued that the long-awaited plan to combine TIM’s fixed line with that of Open Fiber was ‘the main road’ of business strategy for TIM, but ‘not the only one’.
The pact would create the single broadband network that TIM CEO Pietro Labriola has tried to mastermind since being mooted a chief executive by the board. Labriola’s turnaround plan was built on splitting the group’s landline grid from service operations.
The boards of directors of TIM and CDP met on Sunday to approve a framework agreement and negotiate a binding deal on a network tie-up with Open Fiber with a deadline for completion of October, a Reuters source said.