Telecom Italia SpA has agreed to sell its land-line network to KKR & Co. in a government-backed deal valued at around €22 billion ($23.6 billion), according to people familiar with the matter.
The phone carrier’s board of directors, after a marathon meeting that started on Friday, approved the grid sale to the US private equity giant on Sunday without making it conditional on a vote by shareholders, the people said, asking not to be identified as the decision isn’t yet public. The approval came despite opposition from the carrier’s biggest shareholder Vivendi SE.
KKR valued the network at around €22 billion in total, including what can be earned if the grid is merged with that of small rival Open Fiber SpA, the people added. The offer does not include Telecom’s submarine cable unit Sparkle valued at about €1 billion.
The decision marks a victory for Chief Executive Officer Pietro Labriola, the main architect of the network sale plan, and is a welcome outcome for Prime Minister Giorgia Meloni’s administration, as the deal with KKR will permit the one-time state-controlled monopoly to slash its debt pile, while allowing government to retain oversight over an asset deemed strategic.
A spokesman for Telecom Italia and for KKR declined to comment.
The board’s decision is set to be challenged by Vivendi, which has long opposed plans to dispose of the network, Telecom Italia’s most valuable asset. The media-conglomerate has called for an extraordinary shareholder meeting where it could try to rally support to halt the sale.
Telecom Italia has for months sought to sell the grid. While the company is privately owned, Meloni’s government and the one led by Mario Draghi before her, played a key role in engineering a deal that would allow the government to maintain influence, given the company’s employment level and the geopolitical importance of the telecommunication network it controls.
After different options failed, the government backed the plan by KKR and readied funds to invest directly in the company to retain control.
Getting the green light from the board became even more complicated at the end of last month, after a London-based investment firm, Merlyn Advisors Ltd, presented a surprise plan to halt the sale and to replace Labriola. While Merlyn only publicly owns about 0.006% of Telecom Italia, the pitch got immediate traction with Vivendi, which has been asking for at least €30 billion to sell the asset.
https://www.bloomberg.com/news/articles/2023-11-05/telecom-italia-board-said-to-approve-sale-of-network-to-kkr