Italy and KKR: agreements for the Tim network spin-off are underway

KKR, a US investment company, has entered into a preliminary agreement with the Italian Ministry of Finance. According to this agreement, the Italian state could acquire a stake of up to 20% in a spin-off of Telecom Italia’s fixed network, i.e. the separation of assets into a separate company. However, this option will only become effective if the ongoing exclusive negotiations between KKR and the Italian operator lead to a concrete final agreement. A statement from the Ministry of Economy and Finance announced the signing of a memorandum of understanding with KKR. This document sets out the conditions for a binding proposal in which the Italian state could obtain a controlling stake of up to 20% in the spin-off of the fixed network. It is interesting to note that, according to the release, these conditions highlight a “decisive role of the government in defining strategic choices.” Currently, Telecom Italia is conducting exclusive negotiations with KKR for the sale of the spin-off NetCo, which will manage the fixed network. The aim is to receive a binding offer for this business by the end of September. This development was signaled in the operator’s second quarter financial results release, which confirmed that preparations for the sale are proceeding according to plan. In addition to KKR and the Italian government, sources say Italian investment fund F2I is also planning to buy a stake in NetCo. This suggests that there could be a broad participation of different stakeholders interested in Telecom Italia’s future fixed network infrastructure.