EQT deal values Wind Tre networks biz at €3.4 billion

Wind Tre has formally announced that it is partnering with EQT Infrastructure to create a new networks company with an enterprise value of €3.4 billion.

The Italian operator’s plan to spin off its network operations and sell a chunk to private equity firm EQT has been in the works for some time and has already made headlines due to the depth of opposition expressed by the country’s major trade unions. But the telco has now made a formal announcement on the matter – including the valuation of the deal – and confirmed that it expects the transaction to close within six to nine months, subject to the usual regulatory checks and so forth.

Wind Tre said it will transfer its active network equipment and wholesale mobile and fixed communications services businesses to a new entity in which its parent, CK Hutchison, will retain a 40% stake, while EQT Infrastructure will take 60%. CK Hutchison and EQT will each nominate two board members, in addition to an unspecified number of independent directors.

Wind Tre will serve as the anchor tenant for the new company, which as yet does not have a name. It has been referred to as NetCo, just like rival TIM’s planned network outfit, but Wind Tre itself did not use that moniker in its latest announcement.

“This is part of our group’s ‘asset light strategy’ for us to recoup the cost of our network investment,” said CK Hutchison’s co-managing director Canning Fok.

“At the same time, Wind Tre will benefit from having a partner to own and maintain a state-of-the-art network which will benefit our customers while having certainty on its cost base for opex and capex,” Fok said. “Our partner EQT is a renowned investor in this infrastructure investment space, and we look forward to working with them for a very long time.”

That last point was perhaps designed to go some way to allaying the concerns of the unions, which recently described the deal as “a mere short-term financial transaction, an economic efficiency without any industrial prospects,” and highlighted to their members that EQT’s usual modus operandi is to invest in a company for between five and seven years before selling on to a longer-term investor.

It will take much more than an offhand comment on timescales to appease the unions on this one though.

Earlier this month SLC-CGIL Fistel-CISL and UILCOM-UIL called a one-day strike for 4 May, as well as taking other action, to protest against the plan. They are up in arms about the whole concept of structural separation and believe that Italy’s telcos – and their staff, crucially – would be better served as integrated companies.

That’s diametrically opposed to Wind Tre’s position. The telco talked up the benefits of having an independent investor plough cash into its networks and be better able to tap into the wholesale market and B2B opportunities, while allowing the services business to focus on customers and on expending its revenue streams beyond core fixed and mobile telecoms.

There has been no official statement from the unions since Wind Tre made the official announcement. However, their latest salvo came a few days earlier, in which the three hit out at the telco for holding a roadshow to sell the benefits of separation to the workforce.

“After the 4 May strike, perhaps the company did not understand that the workers do not want the separation, but only that Wind Tre remains WHOLE and INTEGRATED!” SLC-CGIL Fistel-CISL and UILCOM-UIL declared, capitals their own.

The unions called upon Wind Tre to stop trying to persuade staff of the benefit of the plan and to pull back from it, while urging employees to continue to fight against it. “WE WILL STOP THEM,” the unions insisted.

It seems unlikely that they will…but this will not be an easy split for Wind Tre.

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