MILAN (Reuters) -U.S. fund KKR has submitted a binding bid for Telecom Italia’s domestic fixed access network but will need more time to finalise its approach for the group’s smaller submarine unit Sparkle, Italy’s biggest phone group said on Monday.
A deal with KKR is the centrepiece of Telecom Italia (TIM) CEO Pietro Labriola’s strategy to reshape the group, burdened with 26 billion euros ($27.4 billion) of net debt, as part of a government-backed plan.
A source briefed on the matter told Reuters late on Sunday that KKR’s approach valued TIM’s fixed access network and Sparkle combined at in excess of 23 billion euros.
Telecom Italia and KKR declined to comment on the matter.
That total includes some 10 billion euros of debt and a future potential payment worth more than 2 billion euros linked to a combination with state-backed rival Open Fiber.
TIM did not provide any details about the bid, adding its directors will review it once a preliminary analysis has been completed.
The offer for TIM’s domestic fixed access grid is valid until Nov.
8, with the possibility to extend it further until Dec. 20, the former phone monopoly said.
TIM’s landline network covers nearly 89% of the country’s households and its fibre cable extends over 23 million kilometres across the country.
TIM said KKR has also presented a new non-binding bid for its Sparkle business, for which the U.S fund plans to submit a final bid within four to eight weeks, once due diligence is completed.
According to the source, Sparkle is valued at around 1 billion euros.
Sparkle’s cable network stretches over 600,000 km and it has a direct presence in 32 countries.
TIM’s shares fell as much as 4%, underperforming Italy’s blue chip index, with a Milan-based trader citing a lack of clarity on terms of the offer for the decline.
($1 = 0.9496 euros)
(Reporting by Elvira Pollina and Andrea MandalaEditing by Keith Weir)
