Telecom Italia sells fixed network and causes trouble
The ailing Telecom Italia has decided to sell its fixed-line network to the US financial investor KKR in the face of resistance from its main French shareholder Vivendi. The board of directors of the former monopolist accepted KKR's offer to acquire a majority stake in the division, including debt, for EUR 18.8 billion. Under certain conditions, the price could rise to 22 billion euros, the Group announced. The Italian state, which also holds a stake in Telecom Italia, will acquire a minority share.
Telecom Italia is thus one of the first major ex-monopolists in the industry in Europe to divest itself of its fixed network business and concentrate on the service business. Company boss Pietro Labriola wants to use the proceeds from the sale to restructure the company and, among other things, reduce the 26 billion euro mountain of debt. The sale is expected to be completed in the summer of next year.
The right-wing conservative government of Prime Minister Giorgia Meloni had already declared that it was in favor of the sale. As Telecom Italia's fixed-line network reaches the majority of Italian households, companies and state institutions and is therefore considered to be of strategic interest to the country, the state will retain a foot in the door. As part of the sale, the government intends to acquire a 20% stake and pay up to EUR 2.2 billion for its part.
The major shareholder Vivendi, which holds 24 percent of Telecom Italia, had criticized the KKR offer as too low. The French media group also doubted the viability of the remaining business. However, Vivendi's demand for a decision at an extraordinary shareholders' meeting fell on deaf ears. Vivendi announced that it would take legal action against the Board of Directors' decision. In addition, a group of smaller shareholders had campaigned for an alternative restructuring plan.
KKR's acquisition of Telecom Italia's fixed-line network will receive support from Italy's right-wing conservative government, led by Prime Minister Giorgia Meloni, due to the network's strategic importance to the country. Following the sale, the Italian state will hold a 20% stake in Telecom Italia.
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Source: www.ntv.de
