Vivendi warns board over network sale

Top Telecom Italia (TIM) investor Vivendi has called on its board to only examine offers for its landline network which adequately value the asset, sources close to the matter said, adding to pressure on the phone group’s CEO and directors.

The sale of TIM’S grid, its most valuable asset, is a key plank of CEO Pietro Labriola’s plan to revamp TIM and cut its 25 billion euros ($27 billion) debt pile.

But Vivendi, which quit TIM’s board in January after a round of fruitless talks with the Italian government over the future of the firm, has reservations over the bidding process and does not believe a new bidding round will close a valuation gap.

TIM’s board this month mandated Labriola to start a formal bidding process and seek improved offers from Italian state lender Cassa Depositi e Prestiti (CDP) and Macquarie (MQG.AX), as well as from rival suitor KKR (KKR.N) by April 18.

Both initial rival offers valued TIM’s network assets at least 10 billion euros below a 31 billion price tag set by Vivendi (VIV.PA), sources have previously said.

In a letter sent to TIM’s board, Vivendi also said the terms of any grid sale must ensure that TIM’s remaining services business is on a sustainable footing, the sources said.

The French group wants any decision to go through an extraordinary shareholders’ meeting, they added.

CDP, which owns 10% of TIM, offered some 18 billion euros including debt, as part of a plan to combine TIM’s network assets with those of smaller rival Open Fiber.

KKR, which already owns a minority stake in TIM’s fixed network, offered 20 billion euros, including a 2 billion euros earn out mechanism.

The two suitors are studying potential improvements to their rival bids after they received additional information on the asset, sources had previously said. Reuters