French media conglomerate sells most of its remaining stake to state-backed Poste – a fraction of the €4bn it invested in TIM over an eight year period
The French multimedia group Vivendi announced it has signed an agreement with Poste Italiane for the sale of 15.00% of TIM’s ordinary shares and voting rights for a total consideration of €684 million. The transaction will be complete after Vivendi’s notification to the Italian competition authority.
Post Italiane will replace the French congomeragte as the main investor in the operator group with a 24.8% holding. It acquired a 9.8% stake from state lender Cassa Depositi e Prestiti (CDP) in a move supported by the Prime Minister’s office in February. CDP owns more than two-thirds of Poste.
Having recently reduced its holding to 18.4% from 23.8%, after the transaction, it will keep a minority interest, about 2.51% of ordinary shares and voting rights, in the Italian telecoms operator, and 1.80% of its share capital.
Disappointed investor
Vivendi has been unhappy with its investment in the Telecom Italia group for years and objected to KKR being allowed to buy a controlling share in the the fixed line NetCo, FiberCop, that was spun out of the organisation at the end of 2023. It is the only large network operator in Europe to have taken this step.
Vivendi first invested in the Telecom Italia group (TIM) in 2015 as part of a strategy to French tycoon Vincent Bollore’s goal of creating a media empire in southern European. Overall, the French media conglomerate invested €4 billion for its stake in the Italian operator over eight years.
During that time has had to write down the value of its investments as Telecom Italia’s shares have fallen, debt and competition have risen, and the board room has been beset by conflict and a succession of new management and strategies. (Bollore’s aggressive stake-building in the Italian broadcaster Mediaset didn’t go to plan, either.)
In the meantime, TIM’s boardroom battles raged for years. The KKR deal only went through after a long, tortuous process with many twists and turns, with the backing of the government. Vivendi continued to argue that the business and assets had been undervalued in the sale to KKR for about €22 billion (there are cash-out clauses and Vivendi wanted €30 billion) but now, according to Reuters, the French enterprise will drop its legal challenge against the sale.
Will peace break out in the boardroom?
It’s hard to say. Certainly Vivendi has made its presence felt in the boardroom, mostly in opposition, but there may be a different kind of conflict brewing. In Feburary, the Financial Times reported that FiberCop’s management predicted a shortfall in earnings of €449 million, putting prospective dividends in doubt.
As a result, in what the FT described as “an explosive board meeting, FiberCop’s CEO, Luigi Ferraris, quit. Apparently major investors would not accept that their projected billions of euros in dividend payments over the next five years would either have to be cut or the company would have to raise more public debt and risk a ratings downgrade.
Apparently, the main reason for the immediate shortfall was that more customers than expected had cancelled their fixed line subs. The management reportedly also said it expected a €2 billion EBIDTA shortfall over the next five years compared with KKR’s business plan.
This is not a good look for other investors who had come in with KKR – the Adu Dhabi Investment Authority, the Canadian pension fund CPP Investments, the Italian fund F2i and the Italian Treasury.
KKR is insisting that the new CEO, Massimo Sarmi, who was appointed to the board last year by the Italian Treasury, must seek approval from one of two specified KKR executives before making any significant decisions – according to an internal memo the FT says it has seen. Some costs are on hold and the revised 2025 budget is not likely to be ready before summer.
