Gives CEO Labriola time to work rescue plans
The Italian Treasury has guaranteed a €2 billion bank credit line for Telecom Italia (TIM), in support of the phone company’s turnaround, according to Reuters’ sources. The loan bolsters TIM’s finances as CEO Pietro Labriola revamps the debt-challenged group as it decouples its infrastructure from its services businesses.
National treasure
TIM and the treasury agreed to cut the size of the financing from the €3 billion initially discussed due to a drop in TIM’s expected financial needs, Reuters’ insiders leaked. In support the European Union has bent its own rules on state aid, in a move described as a temporary relaxation of the rules. This allowed SACE, Italy’s credit export agency, to provide guarantees covering up to 80% of loans granted to large companies facing difficulties due to the COVID-19 pandemic.
SACE
The aid scheme runs until the end of this month and has already given SACE license to provide guarantees on around €36 billion in bank loans to large Italian companies, according to Treasury data as of mid-June. Economy Minister Daniele Franco is expected to sign off on the decree granting TIM the state guarantee this week, Reuters ‘s sources have predicted.
May 10th decision
The loan will be provided by a group of banks comprising Italy’s UniCredit, France’s BNP Paribas and Credit Agricole and Spain’s Santander, which have authorised it pending the Italian’s government’s approval. The government will guarantee 80% of the sum, one of the sources added. SACE’s board cleared the state guarantee on May 10 without making its decision public, Reuters reported last month.
Revamp
As part of a revamp plan to be presented to investors on July 7, Labriola is considering an outright sale of TIM’s domestic landline grid and international cable unit Sparkle. TIM is discussing a potential deal with state-owned financier Cassa Depositi e Prestiti (CDP), after they reached a non-binding accord last month to create a single broadband champion for Italy which couples TIM’s network assets with those of CDP-controlled rival Open Fiber.