HomeInfrastructureVivendi prices TIM out the market

    Vivendi prices TIM out the market


    TIM might find it tough to sell network

    Vivendi has asserted that Telecom Italia (TIM) must value its fixed landline network at €31 billion ($33 billion) in any sale, far above any market valuation, a source close to the French media group, TIM’s apex investor, told Reuters.

    Vivendi’s stance might make it tough for TIM to sell its network, a possibility the former phone monopoly is currently exploring in discussions with its second biggest investor, after Vivendi, national investment bank Cassa Depositi e Prestiti (CDP). Vivendi believes a sale had to meet certain criteria in the interest of all of TIM’s shareholders, reports Reuters.

    Vivendi owns 23.8% of TIM and its support is vital if any asset separation deal is to get accepted. TIM declined to comment. TIM’s landline grid should carry at least 10 billion euros of the company’s debt were it to be separated from the group’s services arm, sources said.

    TIM’s new CEO Pietro Labriola is working on plan to separate the wholesale fixed network operations from its services businesses and will present his strategy to investors on July the 7th. As part of the plan, TIM is considering an outright sale of its domestic landline grid and its international cable unit Sparkle.

    TIM is discussing the potential sale with state lender CDP after they signed a non-binding accord last month to create a unified broadband champion in Italy combining TIM’s network assets with those of CDP-controlled rival Open Fiber. CDP would control the combined network entity.

    Discussions involve also infrastructure funds Macquarie and KKR, who would also need to back a deal. Macquarie is a minority investor in Open Fiber.

    New York-based KKR, which last year offered to buy the whole of TIM for 33 billion euros including debt but was rejected, holds a stake in TIM’s last-mile network. Both funds would remain as minority investors in the TIM-Open Fiber single network operator.

    After opposing the idea that TIM could lose control of its main infrastructure asset, Vivendi has opened the door to supporting Rome’s efforts to create a single broadband operator under state oversight. Its CEO Arnaud de Puyfontaine has warned Vivendi would only back a sale of the network that valued it fairly, rejecting as inadequate analyst valuations for the grid of 17-21 billion euros before synergies.

    The value is also far higher than a price tag for the business estimated by TIM of about 20 billion euros including debt. Reuters’ source close to Vivendi said the French media group was a long-term investor in TIM and, following a split, would focus its strategic efforts on the group’s services arm which it ruled out selling.