Telecom Italia plans €1 billion asset sale to cut debt and reward investors

Telecom Italia SpA may sell assets worth about €1 billion ($1.1 billion) in a bid to further reduce its debt and potentially remunerate investors, people familiar with the matter said.

The phone carrier may dispose of its remaining stake in mobile tower operator Inwit SpA, valued at about €300 million, the people said, asking not to be named discussing private deliberations.

That disposal would come in addition to the planned sale of the carrier’s Telecom Italia Sparkle SpA subsea unit, expected to come in at €600 million to €800 million, they said.

A deal for the Inwit holding is not imminent and could materialize as late as in 2026, the people said. A spokesperson for Telecom Italia declined to comment.

Telecom Italia shares slumped earlier this month as investors raised concerns over a higher-than-expected debt forecast for the end of 2024. The company said it will be able to meet its multi-year guidance even if its debt rises this year following the closure of a landmark deal to sell off its fixed-line network — a move drawn up by the one-time monopoly in a bid to bring the debt under control.

The newest disposal would help the former phone monopoly raise cash, which could then be used either to further cut debt or to remunerate shareholders, the people said.

Telecom Italia’s network sale — to US-based KKR & Co. — was signed late last year, marking the first time a European phone carrier has opted to sell off its fixed-line grid. KKR last week confirmed that the deal is set to close in the summer.

Read More: Telecom Italia’s Record Plunge Shows Skepticism on Debt Outlook

“Telecom Italia is expected to return to generating cash at group level, as well as in its domestic Italian market, thanks to our new three-year business plan,” Chief Executive Officer Pietro Labriola told daily Corriere della Sera in an interview over the weekend.

The eventual sale of Sparkle will also help accelerate plans to possibly remunerate shareholders, the CEO said.

Italy’s telecommunications sector has seen a flurry of deals in recent months. Vodafone Group Plc earlier in March struck an €8 billion agreement to sell its Italian business to Swisscom AG, bringing to a close a years-long divestment effort and setting the stage for a shake-up of the fiercely competitive Italian market. Bloomberg