Mar 2, 2022 - Economy & Business

Telecom Italia's takeover alternative

A home phone with cobwebs over it
Illustration: Sarah Grillo/Axios

Telecom Italia reportedly wants KKR to abandon its takeover pursuit of the company, which it views as too low, and instead participate in a landline unit spinoff, per multiple reports. A formal proposal is expected to come Wednesday.

Why it matters: Italy's network infrastructure needs an upgrade, and the government wants leaders Telecom Italia and rival Open Fiber to work together — viewing the alternative as duplicative investment. This alternative plan could help achieve that end, with KKR helping to cover some of the costs.

Backstory: KKR made an indicative buyout bid last November, which would value Telecom Italia at around €33.2 billion (including the assumption of more than €20 billion in net debt). The carrier has responded coolly, due to both price and strategic value.

The bottom line: "The counter-proposal would still allow KKR to strengthen its grip over Telecom Italia's landline network once it’s separated, the people said. No final decision has been taken on the plan, which remains preliminary, they said. KKR already owns 37.5% of the Telecom Italia secondary grid running from street cabinets to premises." — Bloomberg

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