UPDATE Telecom Italia (TIM), headquartered in Rome, is contemplating selling assets worth around $1.1 billion to raise cash and further reduce its debt, Bloomberg reported. TIM said it is already planning to sell its wholesale operations, Sparkle, which could raise $650 million to $870 million. In addition, TIM may dispose of its remaining stake, valued at around $325 million, in Infrastrutture Wireless Italiane (INWIT), Italy’s largest tower company with approximately 23,300 macro sites. According to Bloomberg, a deal for TIM’s INWIT holdings is not imminent and may not happen until 2026.
TIM has already accepted a binding offer valued at approximately $20 billion for its fixed network assets, dubbed NetCo (excluding Sparkle), from a consortium led by investment firm KKR, Inside Towers reported. This transaction is expected to close by summer 2024.
As a former monopoly, TIM is Italy’s leading telco and the second largest mobile network operator, according to Inside Towers Intelligence. At year-end 2023, TIM reported its operations consisted of 15.2 million retail and wholesale fixed access lines and 30.1 million mobile subscriber lines and connected devices. The company’s financial reports show that it is carrying about $35 billion in debt. The NetCo sale would help TIM reduce its debt by approximately $15 billion.
The company is under increasing pressure following its higher-than-expected debt forecast for the end of 2024, presented at its recent Capital Market Day 2024 session. TIM said it will be able to meet its multi-year guidance even if its debt rises in 2024 after the NetCo deal closes. KKR last week separately confirmed that the deal is set to close in the summer, Reuters reported.
TIM CEO Pietro Labriola, in a recent investor conference, cautioned investors the company might need to raise billions in capital if the planned sale of its fixed network to KKR does not go through, according to Reuters. Labriola said TIM expects to gain necessary approvals to complete the sale to KKR this summer but if the NetCo deal collapses, he acknowledged that the operator would need to reduce spending drastically or seek fresh capital to sustain planned network investments.
Nonetheless, Labriola remains optimistic. “Telecom Italia is expected to return to generating cash at group level, as well as in its domestic Italian market, thanks to our new three-year business plan,” he told daily Corriere della Sera in a recent interview.
By John Celentano, Inside Towers Business Editor
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