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Negotiations related to the transaction have been ongoing since June last year
The Italian government has cleared Telecom Italia (TIM)’s sale of its fixed line network to US investment firm KKR, noting that KKR’s ownership does not contravene the state’s ‘golden power’ rules designed to protect its strategic assets.
Italy’s so-called ‘golden powers’ legislation allows the government to limit or intervene in foreign corporate transactions that involve purchasing stakes in Italian strategic assets, including those linked to national security, infrastructure, and defence.
The government has confirmed that the proposal is “fully adequate to guarantee the protection of the strategic interests connected with the assets involved in the transaction,” explained TIM in a statement.
In a separate statement from the government itself, it was noted that the approval came after the two companies agreed the government would have the power to oversee NetCo in areas that concerned defence and national security. This includes the creation of a new security taskforce to oversee the business’s ongoing operations.
Last year, TIM made the decision to sell off its fixed-line network for €28.8 billion to KKR, largely to reduce its debt pile, which currently stands at €26 billion. TIM’s largest shareholder Vivendi (who have a 23.75% share) has made no secret of its disapproval of the deal, arguing that TIM’s assets are €30 billion and are therefore being undervalued. The firm also claims TIM failed to request a shareholder vote on the decision, which they say is a breach of applicable governance rules. The firm have said in a press release that they will use “all legal means at its disposal” to refute the decision, but so far these misgivings have done little to slow the deal’s progress.
From a government perspective, the deal has always been attractive, potentially paving the way for the merger of TIM and rival Open Fiber’s network assets into a single national fibre network – something the government has long championed. Last summer the government secured the right to take a stake of up to 20% in the spun-off NetCo for €2.2 billion, giving them much needed influence over what they view to be critical national infrastructure.
The deal is expected to be finalised by the middle of this year.
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