Thursday, 27 January 2022

TIM mulls new CEO as KKR invites Saudi wealth fund to join takeover bid

by Harry Baldock, Total Telecom
Tuesday 11 January 22

Sources suggest that US-based private equity firm KKR is trying to engage Saudi Arabia’s Public Investment Fund (PIF) to help finance their takeover bid for Italian incumbent operator TIM

In November last year, US investment fund KKR submitted a bid to acquire Italy’s largest operator, TIM, for a sum of €10.8 billion.  The motivation behind the bid was fairly clear, with analysts suggesting that KKR would seek to spin off TIM’s valuable fibre infrastructure at a time when these assets are proving extremely valuable all over the globe…

In November last year, US investment fund KKR submitted a bid to acquire Italy’s largest operator, TIM, for a sum of €10.8 billion

The motivation behind the bid was fairly clear, with analysts suggesting that KKR would seek to spin off TIM’s valuable fibre infrastructure at a time when these assets are proving extremely valuable all over the globe. Indeed, the offer follows KKR acquiring a 37.5% stake in TIM’s ‘last mile’ fibre network, FiberCop, for €1.8 billion last year.

Now, reports suggest that KKR has approached Saudi Arabia’s PIP, chaired by Crown Prince Mohammed bin Salman, seeking a partnership to fund the Italian takeover.

For the PIF, this would not be the Fund’s first foray into the telecoms sector. They, alongside numerous similar funds worldwide, have shown an increasing appreciation for telecoms infrastructure in recent years. In fact, just last year, the PIF offered local telco Zain $484 million in return for a 60% stake in the company’s Saudi mobile tower unit.

According to sources, the PIF has yet to come to a decision on joining KKR, with the latter having also been in discussion with other sovereign wealth funds and institutional investors.  

The takeover offer comes at a time of great unease for TIM, having just issued the last in a string of profit warnings. Shortly after receiving the offer from KKR, and already facing a storm of internal pressure from shareholders, TIM’s CEO Luigi Gubitosi announced he was stepping down. Pietro Labriola, CEO of TIM Brasil, was designated as general manager, overseeing the Group’s operations on a temporary basis.

This interim period may not last for much longer, however, with TIM Chairman Salvatore Rossi reportedly calling a board meeting to select a new CEO on the 21st of January. According to sources, Rossi’s decision to call the meeting came partly at the behest of vocal shareholder Vivendi, who asked that the process be accelerated.

Perhaps unsurprisingly, Labriola, who is backed by Vivendi, appears to be the frontrunner for the leadership position.

Labriola is also preparing to present the board of directors with a plan to help fortify TIM’s struggling financials on January the 18th – a plan that reportedly includes the possibility of spinning off the company’s fixed line assets. Naturally, if this plan is well received, it could put him in good stead for the CEO position.

 

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