Telecom Italia SpA is nearing a crossroads for its future amid mounting pressure to cut its €30 billion ($32 billion) in gross debt.
The carrier in the coming days needs to decide whether to go ahead with the sale of its landline network, or halt the deal due to opposition from top investor Vivendi SE, which values the asset at a level higher than what’s been offered to date.
New bids — expected by a June 9 deadline — from both KKR & Co. and Italy’s state lender Cassa Depositi e Prestiti SpA with ally Macquarie Asset Management are expected to not be significantly higher than offers already rejected by Telecom Italia, people familiar with the matter said.
Cassa Depositi will likely broadly stick with its existing offer, possibly improving some provisions on synergies, the people said. KKR is expected to slightly increase its bid, also providing some improvements on the synergy side, they said.
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The previous offers were in the €19.3 billion to €21 billion range, people familiar with the matter have told Bloomberg. Vivendi has repeatedly said it values the grid at around €30 billion.
The carrier has scheduled board meetings on June 19 and June 22 to review the offers, the people said. The board has been divided between entering into exclusive talks with one of the bidders — likely KKR — and pulling the plug on the network sale since neither offer matches Vivendi’s expectations, they said.
Government Role
Italian Prime Minister Giorgia Meloni’s administration has taken an active role on the deal, but officials remain split on the best structure to guarantee public oversight over the network while also protecting thousands of jobs. Disagreements on the involvement of Cassa Depositi have caused delays, with frequent U-turns in the planning process.
Telecom Italia shares rose as much as 2.7% in Milan on Thursday following the Bloomberg report, giving the company a market value of €5.4 billion.
A decision to halt the sale process could possibly lead to questions on the future of Chief Executive Officer Pietro Labriola, who’s pushed for the sale for more than a year, the people said. Given the value range of the current bids, Vivendi could pivot to a takeover plan involving all of the current suitors, or opt for an alternative path, possibly involving the sale of the carrier’s Brazil unit Tim SA, the people said.
Representatives for Telecom Italia, Cassa Depositi, Macquarie, KKR and Vivendi all declined to comment.
(Updates with state role in seventh paragraph.)