The Italian government has officially ended its long-standing plan to create a single fixed network using the assets of TIM and Open Fiber, but it doesn't end there.
TIM responded by announcing its "willingness to discuss" as it developed plans for a new single network, and confirmed that the deal it signed with Open Fiber shareholders last May may now be considered null and void.
TIM, Open Fiber, CDP Equity - the private equity arm of state-backed Cassa Depositi e Prestiti (CDP) and a shareholder in both telcos - KKR and Macquarie Asset Management signed a Memorandum of Understanding (MoU) six months ago for the single network, with a view to reaching a binding agreement by the end of October. A series of delays followed, notably due to the Italian elections that brought Giorgia Meloni to power in Italy, but despite this, CDP planned to make an offer for TIM's network assets by November 30.
The mismatch between the various stakeholders in terms of valuation was widely reported. Essentially, TIM's majority shareholder Vivendi values the infrastructure at around €31 billion, but CDP's valuation is closer to €20 billion, including debt, while many believe a figure of €15 to €18 billion is more realistic. Furthermore, while the new president is fully in favor of effectively renationalizing the TIM network, she is reportedly hesitant about the idea of the CDP paying large sums of money for the assets.
The government didn't have much to say about the cancelled plan, but noted that it was moving forward with a new solution.
"Given the priority of strengthening TIM's human resources and implementing an efficient and extensive national network under public control, the government intends to launch by December 31 a workbench that can help define the best feasible market solution to maximize the interests of the state, the companies involved and their shareholders and stakeholders, taking into account the existing regulations at the national and European level regulations and the necessary economic, financial and employment balance," the government said in a statement after the meeting with trade union representatives.
The so-called workbench raises more questions than it answers at this stage. We don't know what kind of single network plan might be on the table, although it's safe to say that whatever emerges by the end of the year - assuming the government meets its own deadlines - will look different from previous plans.
In the meantime, TIM is certainly keen to move forward with its own restructuring plans while expressing a willingness to work well with other single network parties.
"In accordance with the extension plan presented to the market on July 7 last year, TIM will continue to evaluate all strategic options that will allow it to best achieve its objectives of overcoming vertical integration and reducing debt," it said.
TIM presented a plan in July to separate its network operations from its services business, a move that should and could have been a precursor to a single network strategy. NetCo would be responsible for its network assets, including FiberCop and Sparkle, while ServiceCo would be responsible for TIM's consumer business, TIM Enterprise and TIM Brasil.
Finally, TIM also announced that its Board of Directors has agreed to appoint Giulio Gallazzi, Chairman and CEO of the SRI Group, as an independent director, replacing Luca De Meo, who resigned in September, and is working to find a replacement for Frank Cadoret, who stepped down last month.
Putting its own house in order is certainly a priority for TIM, but the future of the telco is still up in the air and not in its own hands.
