TIM’s grid suitors studying bid improvements, sources says

© Reuters. FILE PHOTO: Telecom Italia (TIM) logo is seen displayed in this illustration taken, May 3, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

By Elvira Pollina

MILAN (Reuters) – Suitors for Telecom Italia (BIT:)’s network are studying potential improvements to their rival multi-billion euro bids for the former phone monopoly’s grid after they received additional information on the asset, sources said on Tuesday.

The sale of the grid is a key plank of CEO Pietro Labriola’s plan to revamp Telecom Italia (TIM) and cut its debt pile of 25 billion euros ($27.1 billion).

The TIM board this month mandated Labriola to start a formal bidding process and seek improved offers from Italian state lender CDP and Macquarie, as well as from rival suitor KKR by April 18.

TIM provided both sides with additional data over its network business last Friday and the contenders have started a re-assessment of their initial offers, the sources added.

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

CDP and Macquarie are both investors in Open Fiber.

KKR, which already owns a minority stake in TIM’s fixed network, offered 20 billion euros, including a 2 billion euros earnout mechanism, according to sources familiar with the matter.

VIVENDI WANTS MORE

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

French media group Vivendi, which quit the board in January after a round of fruitless talks with the government over the future of TIM, has heavy reservations over the bidding process, according to separate sources.

The French group, which owns a 24% stake in TIM and whose support could be key for any network deal to go through, does not believe a new round of offers would close the valuation gap, those sources added.

Vivendi is pushing to negotiate with the Italian government an alternative solution for TIM, aimed at taking the phone group private as part of a division of its assets.

Rome has ‘golden powers’ it can use to fend off unwanted interest in TIM’s network, an asset it regards as of national strategic importance.

Prime Minister Giorgia Meloni’s administration has repeatedly said it wants to secure public control of TIM’s grid. ($1 = 0.9240 euros)