Fastweb offloads FiberCop shares to KKR for €439 million

The Swisscom-owned telco will get €438.7 million for its 4.5% holding in the fibre networks company, which is in line with the price KKR will pay TIM for its own stake in the unit, Fastweb explained.

The deal is subject to the successful closure of KKR's acquisition of NetCo – the name given to TIM's broader networks portfolio – which the companies expect to happen in the third quarter of this year.

That timeline gives us a bit more clarity on the likely progress of the NetCo deal; the firms had previously shared a broader 'summer' target date. Q3 is not exactly summer in Italy, but we're hardly talking about major delays. Particularly in the context of this long-running saga.

After much back-and-forth, TIM accepted a bid of up to €22 billion – €18.8 billion plus potential earn-outs or debt transfer – from KKR for NetCo in November 2023 and since then the pair have been working hard to get the transaction over the line.

Against a background of discontent from certain shareholders – Vivendi made its feelings clear on the network sale from the start and is taking legal action to stop the sale – TIM chief executive Pietro Labriola has secured the approval of the Italian government for the deal and, more recently, the green light from the European Union.

Labriola himself has been up against it too, having faced opposition to his re-election from one minority shareholder group Merlyn Partners, which wanted to put former TIM executive and ardent opponent of the networks sale plan Stefano Siragusa into the top job. But Labriola prevailed, winning shareholder support for another term in office six weeks ago.

Naturally, the CEO's main focus is getting the networks deal through, the move forming a large part of his turnaround strategy for the Italian incumbent. And Fastweb's exit from FiberCop represents one more step forward along the way.

The mechanics of the NetCo deal mean that TIM will transfer its primary network and wholesale assets, and its Telenergia equity, into FiberCop. KKR will then acquire FiberCop, via its Optics BidCo vehicle. It will use that same vehicle to acquire Fastweb's shares too.

KKR has been a part of FiberCop since its early days, having bought into the venture, alongside Fastweb, in April 2021, taking a 37.5% stake. Three years on, the outfit is proving critical to TIM's future and to that of the high-speed networks market in Italy.

Talk of a merger with Open Fiber, the fibre broadband network builder set up by utility company Enel and state lender – and TIM shareholder – Cassa Depositi e Prestiti the best part of a decade ago, began some years back and is still rumbling on.

Open Fiber, now owned 60/40 by CDP and Macquarie respectively, has carried on building out fibre while the TIM/KKR saga has dominated headlines. Earlier this week Reuters reported that it is on the verge of securing €2 billion in additional funding from its two shareholders and its lenders. The deal will come following "months of complex talks," the newswire said, and will be a shot in the arm for the operator, shoring up its finances and enabling to complete its rollout.

It is still widely tipped to become a part of FiberCop, or more specifically, the new KKR networks business at some point in the future. But for now it is ploughing its own furrow.

And for now, TIM and KKR are focused on getting their part of the deal done before they look to add other entities. The Fastweb agreement will help. But there is more work to be done.