The funds will be used to reduce the group’s massive debt.
Telecom Italia SpA is seeking an enterprise value of around 20 billion euros ($21.5 billion) for the landline network it plans to sell to Italy’s state lender (CDP) and a group of international funds, according to reporting by Bloomberg.
The company’s shares rose as much as 5.9% and traded up 4.5% at 10:33 a.m. in Milan following Bloomberg’s initial report of the plan. That marked the best performance on Italy’s benchmark FTSE MIB index, giving the carrier a market value of about 6.4 billion euros.
The proceeds would allow the former phone monopoly, which has an enterprise value of about 36 billion euros and debt of around 30 billion euros according to Bloomberg data, to cut its debt pile, accelerating Chief Executive Officer Pietro Labriola’s turnaround plan, said the people, asking not to be named because the internal calculation isn’t public. The valuation is preliminary and could change, they said.
A spokesman for Telecom Italia declined to comment.
Italy’s fiber network lags behind its EU peers
Telecom Italia said Sunday it’s preparing to sell off the entirety of its network in a plan that would shift control of the asset to the Italian state.
The phone carrier said it reached a preliminary, non-binding accord with state lender Cassa Depositi e Prestiti SpA (CDP), which serves as the government’s financial arm. The agreement would combine TIM’s grid with the network owned by smaller rival Open Fiber SpA, which is controlled by CDP.
The accord also includes Open Fiber and Teemco, a Luxembourg company controlled by US private equity firm KKR & Co., which owns a stake in Telecom Italia’s FiberCop SpA fiber unit. Macquarie Group Ltd., a minority investor in Open Fiber, also signed the deal.
The news marks the end of an era for the carrier, which was privatized in 1997 and has struggled with financing for decades. The ex-monopoly is now hoping to use proceeds from the network sale to cut its debt pile and kick-start a fiber rollout for a country that lags far behind its European peers.
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