Telecom Italia secures €1.5 billion loan before NetCo sale completion 


The news comes just days after the company won €1 billion from the Italian government in a legal battle 

Telecom Italia (TIM) has announced that it has signed a €1.5 billion bridge loan to strengthen its financial position ahead of the sale of its fixed network infrastructure business, NetCo, to KKR and the Italian government for up to €22 billion. 

It is expected that the loan will reassure investors while the sale remains to be approved by regulators.  

In a short press release, the company confirmed that “the transaction is aimed at covering re-financing needs until the closing date of the NetCo transaction and it presents conditions in line with the market benchmarks.” 

The loan has a maturity of up to 18 months and was arranged with BNP Paribas, Credit Agricole CIB, Deutsche Bank, J.P. Morgan, Santander, and Unicredit as bookrunners. 

The sale of NetCo is the brainchild of TIM CEO Pietro Labriola, who says the move is necessary for TIM to reduce its debt pile of over €26 billion by €14 billion and therefore allow the company the financial flexibility it needs to compete in the market effectively. 

TIM’s largest shareholder, French media company Vivendi, however, has expressed its disapproval of the deal, saying that it greatly undervalues TIM’s fixed network assets. In a November press release, the company confirmed that it would “use any legal means necessary” to challenge the decision. 

This new tranche of funding comes in a week when TIM’s financial outlook was already looking up, having just  won a 15 year-long court battle with the Italian government over licensing fees it was ordered to pay in 1998, the year after the Italian telecoms sector was liberalised. The Rome Court of Appeal has ordered the Italian government to repay the €500 million fee, plus revaluation and accrued interest, which leaves the fee standing at €1 billion. 

The government is appealing the decision. 

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