Italian government signs MoU to take minority stake in TIM’s NetCo


The government could take a stake of up to 20% in Telecom Italia (TIM)’s NetCo

US investment fund KKR and the Italian government have signed a Memorandum of Understanding (MoU) that would allow the Italian treasury to take up to a 20% stake in TIM’s NetCo following any binding offer from KKR.

According to sources, the deal would also see the government play a “decisive role” in “defining the strategic choices” of the business.

TIM has been planning to spin off its network unit since late 2021, following a plan devised by new CEO Pietro Labriola. Spinning off this NetCo, which includes the company’s fixed network assets as well as the company’s international carrier business Sparkle, immediately drew interest from numerous investors, including US investment firm KKR.

KKR is believed to have made a nonbinding offer of approximately €23 billion for NetCo back in June, leading TIM to enter into exclusive negotiations with the American firm.

Nonetheless, the sale remains contentious, with the government having repeatedly indicated they desire a role in NetCo’s future, likely via state investor Cassa Depositi e Prestiti, considering TIM’s networks to be critical national infrastructure.

According to sources, local infrastructure fund F2I is also set to invest in NetCo, which would potentially bring the government’s stake in TIM’s networks unit up to 30%.

In addition, TIM’s key investor Vivendi has said that the current offer from KKR greatly undervalues the assets in question, arguing that the infrastructure unit is worth closer to €30 billion.

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