Sunday, 27 September 2020

KKR offers TIM €1.8bn for minority stake in ‘last mile grid’

by Harry Baldock, Total Telecom
Monday 03 August 20

After first expressing interest earlier in the year, KKR has reportedly made a binding offer for 38% of TIM’s secondary copper and fibre networks

The Italian government has long been hungry for TIM to consolidate its fibre business with that of state-owned Open Fiber, a move which would greatly increase efficiencies throughout the country. TIM, however, has been reluctant to do so and has repeatedly resisted government pressure…

The Italian government has long been hungry for TIM to consolidate its fibre business with that of state-owned Open Fiber, a move which would greatly increase efficiencies throughout the country. TIM, however, has been reluctant to do so and has repeatedly resisted government pressure, preferring to maintain control of its own infrastructure. As a result, formal negotiations to merge the two fibre businesses had collapsed at the start of this year.

 

However, in February, TIM revealed that it had been approached by US investment firm KKR, who were seeking a 40% stake in the Italian operator’s new access network business, known as FibreCorp. Now, the offer has been confirmed, with KKR offering €1.8 billion for a 38% stake.

 

This new investment should be music to the Italian governments ears, increasing the possibility of merging FibreCorp with Open Fiber; Italian state bank CDP, which owns stakes in both companies, has reportedly been mulling increasing its equity ownership of TIM from its existing 10% in order to balance KKR’s pending investment. 

 

A new government plan could go some way to meet TIM in the middle with regards to its ownership demands, allowing it to be the majority owner of the merged entity, so long as it provides equal access to all players in the market, sources told Reuters last week.

 

It would appear that TIM is gradually coming round to the government's idea of a single, national fibre network, but it will fight hard for the right to own that network. 

 

How would a potential merger of Open Fiber and TIM's fibre business reshape Italian connectivity ecosystem? Find out from the operators at this year's seminal Connected Italy event 

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