TIM to close NetCo sale next week

In a stock market filing the Italian incumbent said that it and KKR have agreed to close the NetCo deal on 1 July.

The pair have been shooting for a summer completion date since they agreed terms of the deal in November. More recently, TIM disclosed that it was looking at finalising the transaction in the third quarter of the year, which felt like a slight stretch to the timeline, given that its Q3 runs until the end of September. But it turns out that that is not the case at all. The deal will close in summer and right at the start of the quarter, bang on schedule.

Keeping to that original timeframe is certainly a win for TIM, which has faced an uphill battle at times with regard to the networks sale.

It is less than eight months since TIM accepted a €22 billion bid – €18.8 billion plus potential earn-outs – for NetCo from KKR, but the preamble to that decision had felt like an eternity, due to the back-and-forth between the telco and its two potential buyers, the other being state-owned lender and existing TIM shareholder Cassa Depositi e Prestiti (CDP).

Its acceptance of the offer then triggered a new period of uncertainty as TIM worked hard to jump through the required regulatory hoops, as well as dealing with opposition to the deal from major shareholder Vivendi and a move from minority shareholders to replace chief executive Pietro Labriola.

The CEO survived the shareholder vote in April and kept his job. Meanwhile, Vivendi's legal challenge, which it launched as soon as the KKR deal was announced last year, claiming the contravention of shareholders' rights, is ongoing. Most recently, Court of Milan judge Daniela Marconi dismissed Vivendi's request to apply for additional documents to be included in the case, insisting it requires only minutes of TIM's board meeting of 5 November that approved the sale. The final hearing in the case is now set for 5 November this year.

On the regulatory front, all appears to have gone smoothly. The deal got the green light from the Italian government at the start of the year and secured EU approval a month ago.

Thus the way is now clear for the deal to finally close on Monday.

Specifically, TIM will sell NetCo, which comprises its fixed network infrastructure and related real estate, including FiberCop, its wholesale business, and its stake in Telenergia, to Optics BidCo an investment vehicle owned by KKR that includes CPP Investments, the Italian government, the Abu Dhabi Investment Authority's Azure Vista subsidiary and Italian infrastructure fund F2i among its investors.

Once that transaction is complete, Fastweb will sell its 4.5% stake in fibre networks business FiberCop to Optics BidCo, picking up €438.7 million in the process. That transaction is likely to happen pretty quickly once the TIM sale closes though.

With 1 July less than a week away, the stage is now set for the start of a new era for TIM. The eyes of the industry will be on the Italian incumbent as it starts life as an infrastructure-light services company and while the immediate future will likely bring little obvious change, certainly as far as customers are concerned, the telco's financial results will come under closer scrutiny than ever in future quarters.