(Bloomberg) — Telecom Italia SpA said late Sunday that it’s preparing to sell off the entirety of its network, in a plan that would shift control of the multi-billion-euro asset to the Italian state.
The carrier’s shares rose as much as 5.1% in early trading in Milan on Monday. Telecom Italia said it reached a preliminary, non-binding accord with state lender Cassa Depositi e Prestiti SpA, which serves as the government’s financial arm, to combine its grid with a similar network owned by smaller rival Open Fiber SpA, which is controlled by CDP.
The accord was also signed by Open Fiber, and Teemco, a Luxembourg company controlled by US private equity firm KKR & Co., which owns a stake in Telecom Italia’s FiberCop SpA fiber unit, and Macquarie Group Ltd., a minority investor in Open Fiber.
The news marks the end of an era for the carrier, which was privatized in 1997 and has struggled with financing for decades. The ex-monopolist is now hoping to use proceeds from the network sale to cut its staggering debt pile and kick-start a fiber rollout for a country that lags far behind its European peers.
Turnaround Plan
The deal will allow Milan-based Telecom Italia to “focus its activities in the Italian market on telecommunications and data transmission services as a priority,” the company said.
Under the accord, Telecom Italia’s fixed network infrastructure activities will be split off from its commercial activities and merged with Open Fiber’s network. The involved parties plan to sign a binding agreement by the end of October.
Chief Executive Officer Pietro Labriola, an industry veteran, has been tasked with turning the troubled company around while striving to maintain its independence.
Telecom Italia earlier this year rejected a 10.8 billion-euro ($12 billion) takeover proposal from KKR, preferring to push ahead with an in-house plan aligned with the Italian government’s goal of building a single national fiber network while avoiding duplicate investments.
Labriola also wants to spin the company’s commercial services off into a separate unit. That process will need approval from Italian and European authorities, which could take several months, people familiar with the matter said.
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