Telecom Italia Board Meets To Tackle KKR's Takeover Proposal

The board of Telecom Italia (TIM) meets on Sunday at 1400 GMT (10 p.m., Nov. 21, 2021, in Manila) to discuss a takeover proposal from KKR, two sources said, adding the US fund plans to carve out the Italian phone group's fixed network in which it is already an investor.

Photo Insert: TIM CEO Luigi Gubitosi

TIM's fixed line is its most prized asset and is deemed strategic by Rome, which has powers to block any unwanted moves.

The government of Prime Minister Mario Draghi is also aware of the need to stem TIM's revenue hemorrhage, shoring up the debt-laden group at a time when it needs to step up investments, and protect its 42,500 domestic workers, sources told Elvira Pollina and Valentina Za, Pamela Barbaglia of Reuters.

TIM CEO Luigi Gubitosi last year struck a 1.8 billion euro ($2 billion) deal with KKR which handed the New York-based fund a 37.5% stake in FiberCop, the unit holding TIM's last-mile network connecting street cabinets to people's homes.

Under fire by TIM's top investor Vivendi, Gubitosi has been looking at how to squeeze money out of TIM's assets, revisiting, in particular, a plan to merge TIM's fixed-line grid with that of fiber optic rival Open Fiber. Sponsored by the previous government, that project had run aground under Draghi's executive.

KKR's scheme envisages a single network to be run as a government-regulated asset along the model used by energy grid company Terna or gas grid firm Snam, one of the two sources and a third person close to the matter said.

Also rival private equity firm CVC has studied possible plans for TIM working with former TIM CEO Marco Patuano, now a senior adviser to Nomura in Italy, four people close to the matter said.

To overcome political and regulatory opposition to the single network's plan, Gubitosi has opened up to the possibility of TIM ceding control of the combined entity, something which Vivendi had always been opposed to.

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