Telecom Italia on track to back new chief’s draft plan amid KKR’s lingering £9bn bid
Italy’s biggest phone group Telecom Italia (TIM) is set to give preliminary backing to a draft overhaul plan by its new chief executive, against which a takeover approach by U.S. fund KKR will be assessed.
TIM, which is battling with shrinking revenues in its hyper-competitive domestic market, last week named General Manager Pietro Labriola as chief exec, its fifth boss in six years.
Former chief exec Luigi Gubitosi quit in November, a week after KKR tabled a 10.8 billion euro (£9bn) non-binding bid to take the group private, to which TIM is yet to respond.
A veteran TIM executive, Labriola’s appointment received unanimous board backing, including from state investor CDP. He has been running the group as general manager since November and is working on a plan to reorganise TIM on a standalone basis.
Backed by top investor Vivendi, which has criticised KKR’s offer as too low, Labriola’s appointment complicates the fund’s bid, which will be weighed up against the plan he is set to unveil on March 2.
An early version presented to directors last week envisages splitting TIM’s fixed network operations from its services businesses, sources have said.
Such a move could pave the way for a merger of TIM’s fixed network assets with those of Open Fiber, a move advocated by CDP, while making a scenario in which KKR takes control of the group less likely.
CDP, which owns 60 per cent of Open Fiber as well as 10 per cent of TIM to ensure government oversight of its networks, would likely emerge as a major stakeholder in any combined network venture of the two.
Rome deems telecoms infrastructure of strategic relevance for the country, and the government is keen to foster broadband connectivity.
Growing doubts over the chances of KKR’s offer – which requires backing from both TIM and Italy’s government – have driven TIM shares down nine per cent since the start of the year to around 0.41 euros, below the bid price of 0.505 euros a share.