KKR Bids for Telecom Italia Grid Stake as Spinoff Rekindled
The headquarters of Telecom Italia SpA in Rozzano, near Milan, Italy. (Photographer: Alessia Pierdomenico/Bloomberg)

KKR Bids for Telecom Italia Grid Stake as Spinoff Rekindled

(Bloomberg) -- Private equity giant KKR & Co. submitted an expression of interest for a minority stake in Telecom Italia SpA’s landline network, people familiar with the matter said, in a move that could allow the ex-phone monopoly to achieve the long-planned spinoff of part of its grid.

KKR may buy as much as 49% of the landline’s “secondary network” of copper and fiber lines that run from street cabinets to premises, the people said. The whole of this network was valued by the U.S. investment firm at 7 billion euros ($7.6 billion) to 7.5 billion euros, they said.

Telecom Italia closed 3.8% higher in Milan, having reversed earlier losses.

The company will also team up with KKR in an attempt to buy wholesale-fiber carrier Open Fiber SpA, the people said, asking not to be named because the discussions aren’t public.

Chief Executive Officer Luigi Gubitosi plans to discuss KKR’s informal offer at Telecom Italia’s board meeting Feb. 27, the people said. Bloomberg News last week reported that the firm was open to purchasing a minority holding in the division.

The plan, which calls for the creation of a separate unit for grid-related assets, signals a return by Telecom Italia to the long-discussed idea of partially spinning off its network. The grid unit would be still controlled by the Italian phone giant, the people said.

Gubitosi has since last year been weighing enlisting international funds to help finance a potential network deal with Open Fiber, and to then allow that company to invest in the Telecom Italia landline grid, people familiar with the matter said at the time.

The CEO is also looking to boost demand for premium services, work with rivals on network investments to cut costs and spin off non-core assets.

Spokespeople for Telecom Italia, KKR and Open Fiber declined to comment.

©2020 Bloomberg L.P.

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