Single network ever closer? TIM and CDP at work

TIMlast Saturday, he made it official that he had signed a confidentiality agreement with Cdp (Cassa Depositi e Prestiti) to evaluate “any integration of the TIM network with the Open Fiber networkof which Cdp Equity holds 60% of the share capital“In practice, the negotiations have started and the goal is to reach a memorandum of understanding by April 30. This document will define”the objectives, the perimeter, the structure and the main criteria and evaluation parameters relating to the integration project“, as reported by the official note of the operator.

Some observers see this project as an attempt to recreate a monopoly of the network, while others see it as speeding up the development process of the fiber infrastructure. “There is no alternative and there is a need to hurry. In two years, the possible synergies of investments and projects are likely to be less relevant than they are today“, declared a few months ago the president of CDP Giovanni Gorno Tempini, referring to the agreement. Yes, because trivially the more time passes, the more the Open Fiber network expands, consequently reducing the strategic value of the potential merger. The central theme it mainly concerns areas where the economic return is not so attractive: a double investment would not make sense, according to the operators.

Throughout the time of Gubitosi management, the single network project remained smoky and not very credible, since the failure to give up control of TIM over the network company would have crashed everything on the European antitrust wall. With the advent of the new CEO Pietro Labriola something has changed and indeed the merger plan has begun to compromise with reality. The first positive comment came from Vivendi, who owns around 24% of the company.

We certainly aim to bring TIM back on a growth trajectory. The ongoing evaluations focus on this objective. Vivendi is interested in any solution that promotes the efficiency and infrastructural modernity of the network, while preserving the value of its investment. In this perspective the hypothesis of state control of the networkif it were preparatory to a strategic project led by institutions, it will certainly be evaluated with openness“, declared a spokesman for the French group in December. In summary, a waiver of the majority in the event of separation. A” separation “that Labriola has already foreseen in the new industrial plan with the birth of the network company NetCo and the service company ServCo.

Everything has been consumed in recent months with the ghost oftakeover bid (OPA) of the US fund Kkr. In fact, in November it proposed € 0.505 per share to obtain 100% of the Italian telco. As La Repubblica correctly pointed out over the weekend, Kkr would like to proceed with the acquisition, remove TIM from the stock exchange by paying the shareholders, separate the network, give control to Cdp against a correct disbursement and then evaluate a possible merger with Open Fiber .

The only criticism is that it would take one due diligence (an in-depth investigation) on TIM’s accounts, but for now this has not yet been granted and more than four months have passed since the request. Understandable considering the loss-making budget (8.7 billion) and the recent setbacks on the stock market. But just over two weeks ago the board of directors of TIM asked for an improvement offer and binding, while again denying the due diligence. Kkr should respond shortly but according to several authoritative sources the dispute will not be released without the analysis of the accounts.

In any case, the April 17 there will be a new TIM board of directors and on that occasion the managers will be able to decide whether to take further time or to block the takeover bid by favoring the direct path to the single network. In the second case, the market could react badly because the merger is still a complex process with at least two major variables. The first remains the antitrust one with possible obstacles that could make the operation less convenient for TIM. The second is that of valuations: TIM is very depreciated while Open Fiber on the contrary was valued very well by the Macquarie fund when it acquired 40%.

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