The main investors in Telecom Italia (TIM) are discussing a revamp of the ailing former phone monopoly, Italy’s prime minister said, pledging to protect jobs and infrastructure assets at the group.
Debt-laden TIM has been hit by a string of profit warnings which led to the ousting of Chief Executive Luigi Gubitosi a week after a takeover approach by U.S. fund KKR.
Prime Minister Mario Draghi told reporters at a traditional end of year news conference that it was not yet clear what was happening with TIM.
“The situation is evolving, there is a takeover bid that has to be announced but whose features are unclear, there are negotiations among (state investor) CDP, Vivendi and other TIM shareholders,” Draghi said.
Vivendi, the French media group led by financier Vincent Bollore, is the main shareholder in TIM with a near 24% stake. It has said KKR’s bid does not adequately value TIM.
Sources have said Vivendi is trying to explore an alternative project and seeking an accord with CDP, TIM’s second-largest shareholder with a 10% stake.
“The government wants to protect three things in a corporate overhaul of TIM: jobs, its infrastructure, meaning the group’s fixed-line network, and … its first-rate technology,” the prime minister said.
“The corporate structure we will get to, through decisions taken either by TIM shareholders or also the government, will need to meet those three goals,” Draghi said.
Both KKR’s and Vivendi’s projects entail spinning off TIM’s infrastructure assets, which need investments to be upgraded to support Italy’s digital push, from its services arm.
The previous government tried to spin-off TIM’s infrastructure assets to crate a single ultra-fast network across Italy but that project stalled.
“There are new ideas (on how to proceed) virtually every week, but the government’s line will be dictated by the need to protect those three aspects,” Draghi said.
Shares in TIM rose 2.5% following Draghi’s comments.
Following Gubitosi’s resignations, TIM has promoted senior executive Pietro Labriola to general manager and has said it will try to name a new boss as soon as possible.
In the leadership vacuum, TIM has failed so far to grant KKR access to its books, a condition set by the fund to proceed with a formal bid.
KKR’s $37 billion takeover proposal is conditional on backing from the company’s board and Italy’s government.
“Today the government is not in a position to say: I want this or that. There is no pre-determined path, the situation is in rapid evolution,” Draghi said. Zawya