Telecom Italia’s Future Hangs in the Balance
A crucial decision is looming for Telecom Italia (TIM), Italy’s former phone monopoly, as a Milan court prepares to rule on a request by top investor Vivendi to nullify the sale of its landline grid to a consortium led by KKR. The deal, worth up to €22 billion, has sparked controversy and raised questions about the company’s future.
Vivendi’s Concerns
Vivendi, which holds a 24% stake in TIM, filed a complaint with the Milan court in December 2023, challenging the sale and seeking a higher price tag. The French media conglomerate argues that the deal should have been put to an extraordinary shareholder vote, rather than being approved solely by the board. Vivendi also questions the sustainability of the business left behind, citing concerns about the company’s long-term viability.
Government Support
The KKR sale was sponsored by Italy’s conservative government, which acquired a 16% stake in the network as part of the deal. The government’s backing helped to reduce TIM’s debt and stabilize its finances. However, Vivendi’s criticism of the deal has sparked tensions between the two parties.
TIM’s Response
TIM has defended its board’s decision, stating that it acted within its rights. The company closed the deal in July, despite Vivendi’s objections. The French investor has since taken a back seat, withdrawing its representative from TIM’s board in January 2023.
Potential Sale
Vivendi is now open to selling its stake in TIM, which is currently valued at €930 million. Private equity firms, including CVC, have expressed interest in the holding. Vivendi is seeking a price of between €1.0-1.5 billion, according to sources. However, any sale would require approval from the Italian government, which has the power to greenlight transactions involving more than 3% of TIM.
Uncertain Future
As the Milan court prepares to rule on Vivendi’s request, the future of Telecom Italia hangs in the balance. Will the court annul the sale, or will TIM’s deal with KKR stand? One thing is certain: the outcome will have far-reaching implications for Italy’s telecom industry and the country’s economy as a whole.
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