Telecom Italia is to hold an emergency board meeting on Sunday to evaluate a takeover offer from US private equity group KKR, a deal that would be one of the largest telecoms buyouts of all time.
KKR already holds a 37.5 per cent stake in Telecom Italia’s “last mile” network but has moved to make a full offer for the entire company, according to three people with direct knowledge of the situation.
The offer for the Italian group, which is valued at €7.5bn and has gross debt of €29bn, is the latest sign of private equity interest in the European telecoms sector. Funds are looking to break up businesses, separating the networks from the consumer businesses, to realise value or to improve the performance of the companies.
Telecom Italia, which was the subject of a bitter tug of war for control four years ago between French investor Vivendi and US activist fund Elliott Management, has struggled in recent quarters and issued two profit warnings in the past year.
The shares have declined by a third since March, and two-thirds since 2018, piling pressure on Luigi Gubitosi, the Italian establishment figure who was appointed chief executive in 2018, to turn the company round.
News of the bid was first reported by Corriere della Sera.
Vivendi denied it was in talks with KKR or CVC — as had been reported — or any other institution over a potential take-private from Telecom Italia.
“Vivendi is a long-term shareholder and we want to work with the government and other institutions to get Telecom Italia back on track,” the company said. “We’re not happy with the performance . . . The important thing is to stop this ship from going down.”
Telecom Italia was Europe’s most valuable telecoms company in the 1990s but has lurched from crisis to crisis over the past two decades. It is a politically important company and the government has a “golden power” to block takeovers or asset sales not deemed to be in the national interest.
KKR is one of the most active investors in European telecoms. It bought a minority stake in Telecom Italia’s secondary network for €1.8bn last year, through its infrastructure arm, and was part of a consortium of private equity groups that took the Spanish telecoms operator MasMovil private in a €5bn deal last year. It bought Hyperoptic, a UK full-fibre company, in 2019.
The US buyout group previously approached Dutch telecoms provider KPN with a takeover offer, which was rejected this year alongside a separate approach from EQT and Stonepeak Infrastructure Partners. Either move would have been one of the largest private equity takeover attempts in European history.
Additional reporting by Sarah White in Paris