Wind Tre network sale is off, for now

The Italian operator is not giving much about the reasons behind the failure of the transaction; all we know for sure is that it failed to meet certain closing conditions by Tuesday's deadline. That deadline had already been extended once before and clearly there wasn't scope to do so again.

Doubtless those who opposed the deal – and it had many detractors, including Italy's major trade unions – welcomed the news of its collapse, but any celebrations could well prove to be short lived.

"CK Hutchison will continue to explore possible alternative infrastructure transactions to bring value to the company, including possible infrastructure transactions with EQT Infrastructure should the appropriate opportunity arise," Wind Tre's Hong Kong-based parent said in a statement announcing the termination of the current deal.

There was a similar announcement from EQT Infrastructure, which said it too will look at alternative infrastructure deals, "including with CK Hutchison should the appropriate opportunity arise."

The firms are clearly unwilling to close the door entirely on this deal.

The pair brokered the deal back in May last year, nine months before the eventual expiry of their agreed longstop date. The plan was for Wind Tre to carve out a new entity comprising its active network equipment and wholesale mobile and fixed communications services businesses and sell a 60% stake to EQT. The move would have valued the new business at €3.4 billion.

Their aim was to tie up the deal within six to nine months, so it came as no great surprise when CK Hutchison extended the initial longstop date late last year; at that stage there was no reason to think the companies would be unable to untangle the various issues that were holding them back.

The unions were vocal in their opposition to the deal, and to the whole concept of network separation; TIM has faced a similar backlash as it moves through the process to sell its NetCo business to KKR. But the real problems seem to have come as a result of Wind Tre existing network-sharing partnerships with rivals Iliad and Fastweb.

Wind Tre inked its wholesale 5G network deal with Iliad in January last year. The deal covered the establishment of Zefiro Net, a 50:50 joint venture with the remit of rolling out 5G infrastructure in difficult-to-reach areas. Zefiro Net is a wholesale business with Wind Tre and Iliad as its retail customers. Wind Tre also has a 5G network-sharing deal in place with primarily fixed operator Fastweb that dates back to 2019.

According to Reuters, Wind Tre was engaged in discussions with both parties at the back end of last year with a view to rationalising those deals with its desire to sell of its networks. The Iliad partnership was proving tricky to sort out, but talks with Fastweb were progressing more smoothly, the newswire said.

CK Hutchison did not divulge details, other than to note that it had not been able to reach an agreement with "relevant third parties whose consents are needed" to satisfy the various conditions associated with the deal.

It was pretty safe to assume that Iliad and Fastweb were those relevant third parties though. And it’s likely that those network-sharing deals are still the sticking point. But CK Hutchison did not mention them this time.

"The transaction...has been terminated owing to conditions precedent to closing not being satisfied by an agreed longstop date of 12 February 2024. Accordingly, the transaction will not proceed," it said.

That's a pretty clear statement for now. But the possibility of a new deal between Wind Tre and EQT, or indeed another party, remains. This is another Italian networks plan that will keep us guessing.