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TIM investor CDP renews push for single network plan

Shares in Telecom Italia (TIM) rose 2.9% on Monday after state investor CDP renewed its support for a stalled plan to merge the former phone monopoly’s network assets with those of fibre optic rival Open Fiber.

Italy should quickly build a single broadband network to avoid duplicating investments as it prepares to spend European recovery funds, Giovanni Gorno Tempini, president of the Treasury-owned CDP, told Sunday’s Il Sole 24 Ore daily.

TIM’s fixed line is the indebted company’s most prized asset and a single network would help it to boost its returns by reducing competition.

Gorno Tempini, who sits on TIM’s board of directors, said there was no alternative to reviving an accord between the phone group and Open Fiber.

“And we need to hurry: in two years’ time, possible synergies on investments and projects could be less relevant,” he said.

With a 10% stake, CDP is TIM’s second-largest investor and it controls Open Fiber.

“These statements look unusually bullish, in our view, and seem to revive the single network dossier, after it was frozen for months following the appointment of a new government almost one year ago”, Intesa Sanpaolo analysts said.

TIM faces a takeover approach by U.S. fund KKR that has indicatively valued the group at 33 billion euros ($38 billion) including debt.

Asked about KKR, Gorno Tempini said CDP habitually worked with private investors whose presence was a vote of confidence in its investment choices.

KKR, which already holds 37.5% of TIM’s last-mile grid, plans to carve out the fixed assets and give CDP a leading role in overseeing them, sources have said.

Also TIM’s top investor Vivendi has said it is open to handing the state control network to the state.

With the top job vacant since CEO Luigi Gubitosi stepped down in November following a string of profit warnings, TIM has yet to answer KKR’s approach, which Vivendi sees as too low.

TIM, which has promoted executive Pietro Labriola to general manager, is expected to name a new CEO this month. An ordinary board meeting is scheduled for Jan. 26, two people familiar with the matter said. US News

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