Italian telecom company TIM has approved a proposal from Kohlberg Kravis Roberts & Co. L.P. (KKR) to acquire TIM’s fixed network assets or NetCo, including FiberCop. Optics BidCo, controlled by KKR, will take over the assets at a current enterprise value of 18.8 billion euros, with expectations for this value to rise to 22 billion euros due to earn-outs linked to the occurrence of certain conditions.
A review of the KKR offer by TIM’s board began on Friday, was extended through Sunday and finally achieved approval with 11 directors in favor and three against.
Additionally, TIM received a non-binding offer on TIM’s entire stake in Sparkle; however, this part of deal is currently considered “unsatisfactory” by the Italian telco’s board, and so KKR’s CEO has been mandated to “verify the possibility of receiving a binding offer at a higher value once the due diligence is completed” by December 5th.
The NetCo transaction, expected to conclude by next summer, is part of TIM’s “delayering” plan, which was first introduced in 2022, that aims to overcome its vertical integration by separating its fixed network infrastructure assets from the services that TIM will continue to provide to its retail customers.
It is worth noting that TIM selling its fixed network assets to New York-headquarter KKR is considered controversial, as it puts critical Italian infrastructure into American hands. However, despite such controversies, the Italian government appears to be backing the deal.