TIM's Sparkle sale further delayed

And while it is waiting, it has a nice cash injection to focus on, having just brought in €250 million in proceeds from the sale of its remaining holding in towers business Inwit.

The Sparkle sale promises to be a bigger earner for the Italian incumbent, when it comes to fruition, although it's anyone's guess when that might be, given the timescales so far.

After many months of speculation the Italian Ministry of Economy and Finance (MEF) and partner Retelit, a subsidiary of the Asterion Fund, tabled a non-binding offer, of unspecified size, for Sparkle, TIM's subsea cable business and a strategic national asset, in February. It took TIM just a matter of days to decide that it wanted more money...but we then had to wait another eight months for the MEF to submit a new, €700 million offer.

The TIM board looked at it then passed it back to the government to come up with a binding bid, setting an end-November deadline. But on the 30th of the month we had a statement from TIM announcing not the terms of a deal, but rather another delay.

"TIM's Board of Directors, which met today under the chairmanship of Alberta Figari, took note of the advanced state of negotiations in progress with the Ministry of Economy and Finance and Retelit for the acquisition of TI Sparkle, and agreed to the latter's request to extend the deadline for receipt of a binding offer to 16 December 2024," reads a statement from TIM, published just a few hours before midnight on Saturday.

The telco clearly wants us to know that there is no suggestion of the deal collapsing at this point, hence its reference to discussions being in an advanced state.

There's no reason to believe the parties will fail to come up with a binding bid. Hours before TIM's announcement Milano Finanza reported that the MEF had written to the telco to ask for an extra fortnight, but noted that any pushing back of the deadline "would not imply [any] difficulties or second thoughts," on the part of the government.

The paper also confirmed what we already suspected, that KKR is no longer involved in the Sparkle deal. Apparently the US-based investment firm, which has owned TIM's former networks business for the past five months, did not agree with either TIM or the government on the subsea operator's valuation.

That valuation is still something of a mystery, given the delay in the presentation of the binding offer, which may not exactly match the €700 million initially proffered.

We do know that TIM has had a nice little payday from its towers though. Late last week the telco confirmed that it has completed the sale of its last remaining holding in Inwit, as per the deal it announced in August. To recap, TIM sold its 10% stake in holding company Daphne 3 to 90% owner Ardian for €10.43 per share, which translates to TIM bringing home proceeds of around €250 million. Daphne 3's stake in Inwit fluctuates, but currently stands at 30.8%.

TIM did not comment on what it plans to do with the very last chunk of change it has managed to squeeze out of its erstwhile towers business, but given that deleveraging is currently the name of the game, debt-reduction is a safe bet.

The Sparkle sale, when it finally happens, will help with that too. But it would take a brave industry commentator to put a date on that.