KKR submits bid for Telecom Italia’s main grid network

U.S. fund KKR has submitted a binding bid for Telecom Italia (BIT:TLIT)’s domestic fixed access network but will need more time to finalise its approach for the group’s smaller submarine unit Sparkle, Italy’s biggest phone group said on Monday.

A deal with KKR is the centrepiece of Telecom Italia (TIM) CEO Pietro Labriola’s strategy to reshape the group, burdened with 26 billion euros ($27.4 billion) of net debt, as part of a government-backed plan.

A source briefed on the matter told Reuters late on Sunday that KKR’s bid valued TIM’s fixed access network in excess of 23 billion euros.

That figure includes some 10 billion euros of debt and a future potential payment worth more than 2 billion euros linked to a combination with state-backed rival Open Fiber.

TIM did not provide any details about the offer, adding its directors will review it once a preliminary analysis has been completed.

The binding offer for TIM’s fixed access grid is valid until Nov. 8, with the possibility to extend it further until Dec. 20, the former phone monopoly said.

TIM’s landline network covers nearly 89% of the country’s households and its fibre cable extends over 23 million kilometres across the country.

TIM said KKR has also presented a new non-binding bid for its Sparkle business, for which the U.S fund plans to submit a final bid within four to eight weeks, once due diligence is completed.

Sparkle’s cable network stretches over 600,000 km and it has a direct presence in 32 countries.

TIM’s shares fell 2% by 0740 GMT underperforming Italy’s blue chip index, with a Milan-based trader citing a lack of clarity on terms of the offer for the decline.

($1 = 0.9496 euros)

KKR submits bid for Telecom Italia’s main grid network