TIM-Open Fiber talks progressing slowly

5 Aug 2019

Merger negotiations between Telecom Italia (TIM) and wholesale operator Open Fiber are progressing slowly, a report by Reuters suggests, due to differences in the valuation of Open Fiber by its shareholders. The wholesale provider is co-owned by Italian state lender Cassa Depositi e Prestiti (CDP) and utility group Enel. CDP also has a stake of almost 10% in TIM and is keen to see the two telcos combined to create a single national infrastructure company. TIM, Enel and CDP signed a non-disclosure agreement (NDA) in June which has seen discussions started to evaluate possible forms of integration between TIM and Open Fiber.

The news agency says that CDP and Enel ‘are not yet on the same page over the price tag’ of Open Fiber, however. It cites an unnamed source as saying: ‘They’re miles apart on valuation and if they can’t agree that there’s no way they’ll find a deal with TIM.’ The report says Enel is valuing Open Fiber at around EUR8 billion (USD8.9 billion), while CDP would be happy to accept a lower valuation in order to push an agreement through.

TIM’s chief executive Luigi Gubitosi, has said talks are taking place ‘in a very constructive climate,’ but added that deals like the one with Open Fiber would take some time to hammer out.

Meanwhile, Enel’s CEO Francesco Starace says there is no rush to broker a tie-up. Reuters cites him as saying: ‘We have no hurry, no rush, we have no burning house.’ He went on to say: ‘We don’t want to get into the antitrust loops that an integrated combination might come up with.’ He did add, however, that a deal is worth pursuing: ‘Anything that speeds up and makes more efficient the cabling of the national system is welcome and I think [it] could create value for all the shareholders.’

Separately, TIM has signed an agreement which will give it access to ultrafast broadband infrastructure in rural areas of Italy owned by government agency Infratel. The deal covers around one million homes in 600 communities in the regions of Abruzzo, Calabria, Lazio, Lombardy, Marche, Puglia, Sardinia and Tuscany. TIM plans to utilise fibre-to-the-home (FTTH) and fibre-to-the-cabinet (FTTC) technology to connect end user premises.

Italy, Open Fiber, Telecom Italia (TIM)