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Reports suggest that private equity firm KKR could slightly increase its bid for TIM’s broadband network, while the CDP is unlikely to budge from its original offer
This week marks a major turning point Italy’s incumbent operator TIM, which will soon need to decide whether to move forward with the sale of its fibre network or else rethink its strategy.
At the start of 2022, TIM’s CEO Pietro Labriola outlined a new strategic plan to help the operator cut its roughly €30 billion in debt. Alongside various job cuts and other streamlining efforts, the plan included spinning off the company’s infrastructure into a separate NetCo to entice investment.
Interest in the would-be unit was immediate. US investment firm KKR – already a major stakeholder in the company’s ‘last mile’ network unit FiberCop – quickly presented TIM with a bid for the unit for an undisclosed sum. Shortly after, the state lender the Cassa Depositi e Prestiti (CDP), one of TIM’s major investors, presented a counterbid in partnership with Macquarie Asset Management, prompting TIM to launch a formal auction for the NetCo.
KKR quickly increased its bid to €21 billion, eclipsing the CDP’s bid of €19.3 billion. Subsequent reports last month suggesting that the CDP would be unwilling to increase its own bid any further and could withdraw from the process altogether.
Now, the final deadline for bids for the unit is tomorrow, with insiders suggesting that the CDP’s bid remains broadly unchanged, while KKR may slightly increase.
But despite this bidding improvement, TIM is unlikely to be overjoyed at the prospect of a sale at this price. The operator’s key stakeholder Vivendi has strongly opposed the sale of the network unit under the current conditions, repeatedly suggesting that the company’s assets are being undervalued by up to €10 billion.
According to reports, TIM’s board is divided over whether to move forward with an offer or reject the bids in favour of re-evaluating their options.
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