Following an internal reorganization, Telecom Italia (TIM) has signed a non-disclosure agreement (NDA) with the state investment bank Cassa Depositi e Prestiti (CDP) to begin talks on a possible merger of its fixed network with the state-backed company Open Fiber. This initiative is aimed at reviving a long-standing goal to establish a single fiber network company in Italy.
The notion of combining the networks of the two businesses to create a single national broadband network for Italy has been discussed for at least two years. The government-owned CDP, which has a 60% investment in Open Fiber and a 10% stake in TIM, has long advocated for such an alliance . The government has determined that establishing a unified network will allow for a faster rollout of fiber technology, avoiding an overbuild and maximizing the use of European recovery funding.
The decision comes as TIM CEO Pietro Labriola pushes ahead with a proposal to restructure Italy’s largest phone carrier based on separating its wholesale network operations from the service division.
The Italian operator indicated in a statement that it hopes to reach an agreement with CDP by April 30 to outline the objectives, structure and primary assessment criteria for the integration project. Analysts estimate that the proposal might be worth roughly €5 billion.
With the revelation that official discussions with the CDP have begun, it appears that the odds of KKR‘s takeover becoming a reality are beginning to dwindle. The company’s announcement of the commencement of discussions on Saturday is an indication that TIM intends to deviate from a non-binding proposal for all of its operations made by the US fund KKR in November 2021. TIM kept KKR waiting for four months before agreeing to negotiations in March, while continuing with its autonomous restructuring to unlock the group’s undiscovered potential.
