The debt-laden telco issued three profit warnings last year and has continued to struggle in a price war against its local rivals
This week, sources speaking to Bloomberg suggest that the Italian government is weighing its options for how to reinvigorate national operator TIM, including a potential takeover to pave the way for a single Italian broadband network.
Last month, after months of turmoil all-too familiar to Italian politics, Giorgia Meloni, leader of the right-wing populist Fratelli d’Italia, was sworn in as the new Italian prime minister, replacing the outgoing Mario Draghi.
Since then, the new government has done little to calm the country’s turbulent telecoms sector, which is struggling under the weight of intense competition and stagnant returns. However, its approach to the creation of a controversial single national fibre network through the merger of TIM and Open Fiber’s fixed broadband assets is gradually becoming apparent, favouring a state-takeover of TIM to grease the deal’s wheels.
The concept of creating a single national fibre network in Italy has existed for years, with the Italian government claiming that it would greatly accelerate fibre availability throughout the country and reduce overbuild. Until recently, however, TIM has largely rejected this plan, arguing that it would need majority control of any combined fibre business.
Under the Draghi Cabinet, discussions around the single network had achieved significant progress, with state-run bank Cassa Depositi e Prestiti (CDP) – a stakeholder in both TIM and Open Fiber – suggesting that it would purchase TIM’s fibre network to facilitate the merger. Back in May, CDP, Open Fiber, TIM and additional stakeholders signed a memorandum of understanding (MoU) to this effect, with a focus on integrating the two networks.
However, concerns over the network’s valuation, combined with the political uncertainty within Italy, has seen CDP delay making a binding offer for the fibre business. The deadline for such a bid, outlined in the MoU, was recently extended to the 30th of November with the exclusivity clause notably removed, potentially allowing for alternative offers with new players.
Now, reports suggest that the Meloni administration is in favour of CDP taking full control of TIM, building on comments Fratelli d’Italia had made before the general election began, when they described state control of any national network as ‘a priority’.
Any potential deal to takeover TIM by CDP would likely include US investment firm KKR, which took a stake in TIM’s last-mile grid back in 2020 and went on to present the operator with a €10.8 billion takeover bid in 2021. Despite this bid ultimately being rejected earlier this year after a long delay, sources suggest the firm’s interest in TIM remains considerable.
Similarly, Vivendi, TIM’s largest shareholder, could also be involved in a potential takeover offer by the government.
No formal decision by the Meloni administration has yet been made but, with the extended MoU deadline expiring at the end of this month, their plans will likely become clear later this month.
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