As they collectively hold a stake of less than 3% of TIM’s shares, their divestment plan is highly unlikely to succeed
Last week, Vivendi which is Telecom Italia’s (TIM) single biggest shareholder, demanded that shareholders, rather than the board of directors, should decide on the operator’s future. As things stand, the board is imminently due to examine the binding offer made by US investment fund KRR earlier this month.
The Italian government supports KKR’s bid and state-backed institutions are also shareholders, and the government holds a so-called ‘golden share’. The bid is thought to be for €23 billion and will involve the operator’s fixed infrastructure being set up as a separate NetCo, controlled by the fund.
Vivendi is arguing the valuation is too low and should be €30 billion.
Sell Brazilian assets instead?
Now, according to a statement from TIM, Merlyn Advisors and RN Capital Advisor have sent a letter to the directors proposing a different solution for raising capital and paying off debt: TIM should sell its Brazilian operations and assets, and stick hold of its domestic infrastructure which should remain integrated with its retail operations.
This latest development doesn’t look likely to have a great deal of impact, given that according to Reuters, the correspondents represent shareholders whose collective stake is less than 3% of TIM’s shares. Apparently they include TIM’s former head of networks, Stefano Siragusa.
Set to run and run?
TIM board’s acknowledges receipt of the letter, but reiterate the fact that the plan to sell NetCo “is in line with the plan unanimously approved by the Board of Directors and presented at the Capital Market Day in July last year.” KKR’s offer, believed to be about €23 billion, is due to be discussed at board meetings on 3 and 5 November.
The KKR deal is supposed to include TIM’s international infrastructure arm, Sparkle, but this was not included in the recent binding bid from KRR, which asked for more time to address it.
Vivendi is showing no signs of compromise and the impasse looks likely to continue.