Market Watch

Unraveling the Canceled Wind Tre-EQT Infrastructure Deal

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Last May witnessed CK Hutchison restructuring the fixed and mobile assets of its Italian operator, Wind Tre, with an aim to sell a 60% stake to Swedish infrastructure fund, EQT. The move was closely associated to Wind Tre’s ‘asset light’ strategy given the reduced returns due to intense competition in the Italian market. The deal was valued at €3.4 billion.

Fast forward to recent developments, the sale stands cancelled, and EQT provided a brief statement, “EQT Infrastructure and CK Hutchison, Wind Tre’s current owner, have decided to terminate the transaction owing to conditions precedent to closing not being satisfied by an agreed longstop date of 12 February 2024.”

Although specific reasons causing the deal’s breakdown have not been revealed, individuals closely following the developments might not find this shocking. It was evident by November the previous year that this sale would encounter difficulties particularly due to complications arising from existing network sharing agreements Wind Tre has with its competitors, Iliad and Fastweb.

Iliad and Wind Tre entered a 50:50 joint venture (JV) at the beginning of the last year. This JV was designed to create a new 5G wholesaler, focusing on delivering 5G coverage for rural parts of Italy. According to some insiders, there were clauses in this deal that would come into effect in case of a change of ownership, leading to a deadlock between the two company owners.

Apart from this, Wind Tre’s 5G network sharing agreement with Fastweb would also be affected due to the deal. Though it seemed like this issue would be resolved promptly. However, the ever-increasing complexities in negotiating a solution to this issue forced the CK Hutchison and EQT deal to be delayed incessantly, with an agreement on a final deadline in February to close the deal.

That deadline has now lapsed, and it appears that both companies have indefinitely paused their plans. In its statement, EQT mentioned its intentions to lookout for additional opportunities and prospects without ruling out a fresh approach towards a deal with Wind Tre’s infrastructure division. According to the statement, “EQT Infrastructure will continue to explore alternative infrastructure transactions, including with CK Hutchison should the appropriate opportunity arise.”

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