TIM gets new NetCo bids, but sale could still falter


TIM has confirmed receipt of two new bids for its network assets, but despite the fact that there are still two horses in the race, it could yet draw to a close with no winner.

The Italian incumbent issued its now customary short statement to let us know that it received new non-binding bids from both the CdP Equity/Macquarie consortium and KKR ahead of Friday’s deadline. It provided no more information about the new offers, including giving no indication of value or increase therein, but said its board will examine the bids at meetings scheduled for 19 June and 22 June. So, we have no more information at this stage and we’re still playing the waiting game.

What makes this latest announcement from TIM newsworthy is the fact that it has received offers from both groups vying to pick up the network assets. A month ago there were fairly credible reports that CDP/Macquarie had dropped out of the running, but clearly that wasn’t the case.

It’s tempting, then, to believe we are close to finding out who the winner will be in this – seemingly endless – contest to acquire NetCo, the vehicle that houses TIM’s fixed-line assets, its FiberCop fibre-to-the-home (FTTH) unit, and international wholesale operator Sparkle. The competition began in earnest as long ago as early March, when CDP/Macquarie lodged an offer to rival that already on the table from KKR.

Twice since then the telco has asked for more money from the bidders and has twice received re-worked bids. It hasn’t shared any information on that score, but media reports from inside and outside Italy have put the offers at a broadly similar level, around the €20 billion mark.

The fact is though that major shareholder Vivendi wants more money than that – the French firm started off looking for €31 billion, but is reportedly willing to drop to €26 billion – and while the TIM board has almost certainly asked for higher offers for the last time, it’s starting to look like there could be no victor.

Italian financial paper Il Sole 24 Ore quotes sources close to Vivendi as saying the company expects TIM to once again reject the two bids as inadequate. It is apparently unhappy with the “inconsistent” increases from the bidders and is preparing to block both offers, the news outlet said over the weekend.

Furthermore, Vivendi sees the latest bids, which it expects to be rejected, as closing the book on this period of offers for NetCo, and the start of a new chapter that will, the sources say, brings a change of pace and a new industrial strategic vision, rather than a purely financial one.

The paper speculates that KKR could have added another €2 billion to its bid, putting it at around €23 billion, including earn-outs presumably, although it did not comment on what CDP/Macquarie might have offered. That’s getting closer to the €26 billion figure we have been talking about, but it’s starting to look as though Vivendi is not simply looking for more cash.

“The idea that TIM has to sell the network in order to survive must be strongly denied, because there are other plans that achieve the same objective but will less economic effort,” Il Sole’s sources said.

There’s no definitive answer yet, of course. But TIM’s structural separation plan looks to be floundering.


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