TIM could sell yet more assets to cut debt

The telco is looking to bring in another €1 billion through asset sales, Bloomberg reported, noting that the proceeds from any disposals would be used to lower its debt burden and potentially as a payout to investors.

Investors who are doubtless becoming increasingly disgruntled.

TIM's share price remains depressed almost a fortnight after it published the details of a new three-year plan, dubbed Free to Run, that sent its stock into freefall. Debt was at the heart of the matter. TIM last week admitted to what the financial analysts had already worked out: that debt will rise following the divestment of its NetCo business, a sale aimed at – amongst other strategic and financial goals – culling debt.

There's nothing shocking in what Bloomberg's sources have to say about asset sales. It's the fact that they are saying it at all that's noteworthy here.

The bulk of the €1 billion will come from the divestment of subsea cables business Sparkle, which we already know about and is – we believe – well underway. When it made the debt announcement TIM noted that the Sparkle sale process was ongoing, but gave no update. Italy's Ministry of Economy and Finance finally tabled a bid for Sparkle last month, but TIM pushed back and asked for more money. Neither party has shared any figures, of course.

The sources said they expect TIM to bring in €600 million-€800 million from the Sparkle sale. In addition, it could look to offload its remaining holding in towers business Inwit, generating another €300 million, they said, making vague reference to private deliberations on the matter.

TIM has already squeezed a fair amount out of its towers business, which it merged with Vodafone's Italian towers four years ago. In August 2022 it completed the sale of a 41% stake in Daphne 3, its towers holding company, to a consortium of investors headed by Ardian for €1.3 billion. That transaction left TIM with just 10% of Daphne 3, which itself holds 29.9% of Inwit, thereby giving TIM a very small indirect holding in the towers outfit.

There have been numerous rumours since then that the remaining towers stake, such as it is, could be on the block. Hence this latest report from Bloomberg won't take anyone by surprise. With TIM's plan to reinvent itself as a network-free retail player on a solid financial footing having fallen somewhat flat, to put it mildly, the idea that it could need to pursue further asset sales is highly credible.

That €300 million figure floated by the newswire merely assumes that Inwit's valuation hasn't changed much since the Ardian deal 18 months ago.

However, we shouldn't expect an announcement from TIM any time soon. A deal for Inwit could be a year or more away – possibly as late as 2026, Bloomberg's sources said.Again, the news here isn't the possible sale of Inwit at some point in the future. It's the fact that we're still talking about TIM shoring up its finances despite its extensive, and ongoing, business transformation.