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    TIT   IT0003497168

TELECOM ITALIA S.P.A.

(TIT)
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Italy's TIM, CDP eye preliminary deal on single network, sources say

05/20/2022 | 01:13pm EDT
FILE PHOTO: Telecom Italia new logo is seen at the headquarter in Rozzano neighbourhood of Milan

MILAN (Reuters) - Telecom Italia (TIM) is eyeing a preliminary agreement with state lender CDP over a long-held plan to merge TIM's network assets with those of state-backed rival Open Fiber as early as next week, two sources said on Friday.

Under pressure for years in its hyper-competitive domestic market, debt-laden TIM last month started formal talks with CDP to revive a plan to create a single broadband network champion.

Negotiations came at a time when TIM CEO Pietro Labriola, who took the helm of the company in January, is working on a proposal to break up TIM's operations in a bid to unlock value and pursue M&A deals.

Under such a plan, Labriola said the former phone monopoly was open to relinquishing control of its network infrastructure, seen as a way to ease a merger deal with Open Fiber.

As part of the overhaul, most of TIM's network assets would be carved out into a separate unit, called NetCo, which would take up a significant portion of the company's debt and domestic staff.

The sources said TIM and CDP are finalising a draft of a framework agreement which could be discussed at a Telecom Italia board meeting scheduled for May 26, cautioning the non-binding agreement could still be delayed.

Italy is keen to create a single network champion to avoid duplicating investments and speed up fibre optic roll across the country.

Treasury-controlled CDP, which is TIM second largest investor with a 10% stake and holds a 60% stake in Open Fiber, aims to get full control of the combined network entity, sources have previously said.

Infrastructure funds Macquarie and KKR, which hold minority stakes in Open Fiber and TIM's grid respectively, have also been involved in discussions as their support would be key for any plan to go through.

KKR, which spent 1.8 billion euro to buy a 37.5% stake in Telecom Italia's last mile network unit FiberCop and attempted a failed takeover approach for the whole of TIM, has expressed concerns over potential future regulatory and valuation issues related to the single network plan.

But a source familiar with the matter said the fund would not oppose the framework agreement.

(This story refiles to fix reference to Macquarie and KKR in paragraph 9)

(Reporting by Elvira Pollina; Editing by Keith Weir)


© Reuters 2022
Stocks mentioned in the article
ChangeLast1st jan.
KKR & CO. INC. -0.73% 45.92 Delayed Quote.-37.87%
MACQUARIE GROUP LIMITED -0.16% 164.24 Delayed Quote.-19.91%
TELECOM ITALIA S.P.A. 2.96% 0.2571 Delayed Quote.-42.49%
VIVENDI SE -1.32% 9.568 Real-time Quote.-18.45%
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Financials
Sales 2022 15 581 M 16 288 M 16 288 M
Net income 2022 -5,44 M -5,69 M -5,69 M
Net Debt 2022 25 236 M 26 381 M 26 381 M
P/E ratio 2022 -47,2x
Yield 2022 1,85%
Capitalization 5 235 M 5 472 M 5 472 M
EV / Sales 2022 1,96x
EV / Sales 2023 1,85x
Nbr of Employees 51 893
Free-Float 74,7%
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Number of Analysts 19
Last Close Price 0,25 €
Average target price 0,34 €
Spread / Average Target 36,4%
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Pietro Labriola Chief Executive Officer & Director
Adrián Calaza Chief Financial Officer
Salvatore Rossi Chairman
Michele Gamberini Chief Technology & Information Officer
Stefano Siragusa Chief Revenue, Information & Media Office
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