The Italian operator is striving to slash its debt mountain through the sale, but has racked up an additional €1bn since the end of 2023
Telecom Italia (TIM) has been gained “unconditional approval” from the European Commission to sell its fixed access network to KRR. The assets have been split off into a netco. The deal is worth up to €22 billion.
The Italian Government approved the deal in January with the so-called golden rule proviso. This gives the government the right to impose conditions or veto transactions and investments in sectors that are deemed as strategic, such as energy, telecoms and financial services.
The Commission explained in a statement why, after investigation, it concluded, “the proposed merger would not raise competition concerns on the market for wholesale broadband access services in Italy and cleared the transaction unconditionally.”
One of the primary reasons for splitting the company is to slash debt and release more value from the operator’s assets. However, last Thursday, TIM’s stock dropped by as much as 9% before making a partial recovery on news of its first quarter earnings. Revenue was up 1.2% to €3.9 billion, and earnings rose 1.6% before interest, taxes, depreciation and amortisation.
Still, analysts are concerned that Brazil drove the improvement (revenues up 8.1%) while domestic revenues fell 1.3% to €2.8 billion compared with the same period last year. This was due to a decline in mobile and fixed subscribers.
Also, the group’s debt has reached €21.4 billion, an increase of €1 billion since the end of December 2023.
The operator is still hoping to sell off its international infrastructure arm, Sparkle, but so far the asking price from KKR and the Italian government have not offered the €1 billion it is seeking.