Telecom Italia

History

2024

Sale of fixed-line operator for €22bn

On June 24, 2024, operator Telecom Italia (TIM) announced the sale of its fixed-line network to American investment company KKR. The value of the transaction, which received approval from the Italian government, amounted to €22 billion.

Negotiations between TIM and KKR continued for more than two years. TIM's fiber and copper cable-based wired network covers almost 89% of Italian households, making it one of the main elements of the country's telecommunications infrastructure. KKR estimated the acquired assets at €18.8 billion, but the total value of the transaction will be €22 billion, taking into account the planned merger with Open Fiber SpA.

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WSJ

It is assumed that the sale of a fixed-line network will help TIM reduce its debt obligations by €14 billion. Under the business plan, the deal will provide greater commercial flexibility to compete in the domestic consumer market. In addition, TIM will be able to explore various options to strengthen its position, including new partnerships and possible merger and acquisition deals, Reuters reported. After the transfer of the asset, the number of TIM staff in Italy will be approximately 16 thousand employees.

Meanwhile, the deal was opposed by TIM's main investor, Vivendi, which said the sale of a fixed-line network to US investment firm KKR was "illegal." French media group Vivendi owns a 24 percent stake in TIM and intends to further develop its business in Italy.

Vivendi deeply regrets that TIM's board of directors accepted KKR's offer to buy the asset without informing shareholders in advance and thereby violating current corporate governance rules, Vivendi said in a statement.[1]

Confiscation of 250 million euros due to the connection of paid services without the knowledge of subscribers

At the end of February 2024, the Milan prosecutor's office announced that Italian law enforcement agencies had confiscated approximately €250 million from the telecommunications company Telecom Italia. The reason is accusations of fraud related to the unauthorized activation of paid services without the knowledge of subscribers.

According to prosecutors, automatic service connectivity occurred when Telecom Italia customers simply visited a specific web page or used the app on their mobile device. After that, without the consent of the subscriber, a weekly or monthly fee began to be charged. As part of this case, 23 people are under investigation.

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Unsplash

Financial police Italy also received orders to seize money in the accounts of six content service providers that worked with Telecom Italia. As a result, the total amount of confiscated funds can reach about €322 million. According to the case file, illegal activities were carried out from 2017 to 2020.

Telecom Italia itself says they are surprised by the confiscation of funds. The operator notes that in the period from 2019 to 2020, he reimbursed customers for debited money for unnecessary services, and also blocked additional services connected automatically.

We hope that all aspects of this proceedings will be finally clarified in the near future, - noted in the message of Telecom Italia.

In January 2024, the Italian government approved a deal to sell the Telecom Italia fixed-line network to the American investment company KKR for €22 billion (taking into account the proposed merger with Open Fiber SpA). The sale of the asset is expected to reduce Telecom Italia's debt by €14 billion. As part of the deal, the Italian authorities intend to receive a 20% stake in the new enterprise.^[2]

Notes