Black Smoke Over Sparkle: TIM Delays Sale Again Amid Fibercop Turmoil
The saga surrounding the sale of Telecom Italia’s (TIM) subsea cable business, Sparkle, continues to unfold with yet another delay.The deadline for the final decision on the €700 million offer, presented by the Ministry of Economy (Mef) and Retelit through the Asterion fund, has been postponed to March 15th. This marks the latest in a series of setbacks for the long-anticipated deal, which was initially set for November 30th and has as been rescheduled multiple times [[1]].
TIM’s Note: A Glimmer of Hope Amid Delays
Table of Contents
- TIM’s Note: A Glimmer of Hope Amid Delays
- Fibercop’s Leadership Shake-Up: Ferraris Steps Down
- Unions Sound the Alarm
- Key Points at a Glance
- What’s Next?
- The Single Network Dossier: A February Construction Site
- Employment Concerns and Government Accountability
- Rab-Style Rules and Regulatory Implications
- Key Points at a Glance
- Looking Ahead
- Interview: Navigating Italy’s Single National Network Project
In a brief statement following a board meeting on January 22nd, TIM announced, “The Board of Directors has ascertained the positive evolution of the negotiations with Mef and Retelit relating to the offer for Sparkle. The company has granted an extension until March 15th to allow the finalization of preparatory operations for the final decision on the offer.”
While the statement hints at progress, it’s clear that CEO Pietro Labriola had hoped to expedite the deal. Labriola aimed to exclude Sparkle from the scope of TIM’s upcoming industrial plan, expected to be unveiled on February 13th. However, unresolved issues, including a €600 million bank loan, have complex the process. Under the proposed deal, Mef would hold a 70% stake, with the remaining 30% going to the Asterion fund.
Fibercop’s Leadership Shake-Up: Ferraris Steps Down
Meanwhile, Fibercop, TIM’s network spin-off, is facing its own challenges. Just six months into his tenure, CEO Luigi Ferraris has resigned, citing undisclosed reasons. Fibercop, which is partially owned by the American fund KKR (37.8%), the Canadian pension fund CPPIB (17.5%), and Abu Dhabi’s sovereign fund Adia (17.5%), is now under the interim leadership of Chairman Massimo Sarmi.
In a statement, Fibercop said, “The Board of Directors has unanimously decided to accept the proposal presented by Luigi Ferraris to resign from the position of CEO, with immediate effect. The President will manage the Company together with a proven and experienced management team to continue to ensure the achievement of the company’s strategic and operational objectives.”
Unions Sound the Alarm
The sudden resignation has sparked concern among labor unions. Pino Gesmundo,confederal secretary of the CGIL,and Riccardo Saccone,general secretary of the SLC CGIL,expressed thier unease,stating,“the resignation is a very bad sign. It seems clear to us that, if the reasons are actually to be found in disagreements over the company’s prospects with KKR, the risks of the operation that we have always denounced are coming true in a very short time.”
They further warned against a “minimalist” approach by KKR, which they fear could prioritize laying fiber and reducing debt over innovation and network intelligence projects.
Key Points at a Glance
| Aspect | Details |
|————————–|—————————————————————————–|
| sparkle Sale Deadline | Postponed to March 15th, 2025 |
| Offer value | €700 million |
| Stakeholders | Mef (70%), Asterion Fund (30%) |
| Fibercop Ownership | KKR (37.8%), CPPIB (17.5%), Adia (17.5%), Mef (16%), F2i Fund (11.2%) |
| Fibercop Leadership | Luigi ferraris resigns; Massimo Sarmi takes interim charge |
What’s Next?
as TIM navigates the complexities of the Sparkle sale and Fibercop grapples with leadership changes, the telecom giant faces mounting pressure to stabilize its operations. The coming weeks will be critical, with the industrial plan presentation and the new Sparkle deadline looming.
For now, the “black smoke” over the Sparkle dossier remains, leaving stakeholders and industry observers watching closely.
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Stay updated on the latest developments in the telecom sector by following our coverage.Share your thoughts on these developments in the comments below.The Italian telecommunications sector is at a crossroads, with significant developments unfolding around the single national network project and its implications for TIM, KKR, and Open Fiber.While the potential for industrial synergies and financial gains is substantial, concerns about employment security and regulatory changes loom large.
The Single Network Dossier: A February Construction Site
KKR has reportedly expressed its willingness to engage in discussions with Open Fiber regarding the single national network project, a move strongly supported by the Italian government.According to analysts at Intermonte, this development aligns with recent press rumors suggesting that a construction site for the single network could begin as early as February.
“We welcome KKR’s openings on the negotiations with Open Fiber, in line with the recent press rumors on the start, starting from February, of a construction site for the single network, strongly supported by the Government,” commented Intermonte analysts.
The potential agreement between FiberCop and Open Fiber by the end of December 2026 could allow TIM to collect an earnout of up to €2.5 billion, representing 75% of the industrial synergies. Intermonte estimates a 40% probability of this outcome, which could add approximately 5 cents per share to TIM’s valuation, bringing the target price (TP) to 38 cents per ordinary share.
Employment Concerns and Government Accountability
While the financial prospects are promising, the labor union Uilcom has raised concerns about the sustainability of the project and the protection of workers’ employment.
“What we have never had with respect to the sustainability of the project and the security of the employment protection of the workers of FiberCop and Tim,” emphasized Uilcom. The union has scheduled a meeting with Minister Urso and Minister Calderone on February 12th to seek answers to unresolved questions.
Rab-Style Rules and Regulatory Implications
The establishment of a single regulated operator could pave the way for the adoption of a Rab-style incentive regulatory regime. This approach, as highlighted by Intermonte analysts, could maximize the earnout in favor of TIM but may also lead to higher wholesale tariffs, which operators might pass on to end customers.
“With the establishment of a single regulated operator, we do not exclude the future adoption of a Rab-style incentive regulatory regime,” noted Intermonte. “This on the one hand increases the possibility of maximizing the earnout in favor of Tim, conversely it could lead to an increase in wholesale tariffs.”
the potential for higher returns on invested capital could also result in a significant re-rating of the valuation multiple, with expectations in the 15-20x EBITDA range, compared to the 9.9x recognized by KKR for NetCo (or 11.6x including future earnouts).
Key Points at a Glance
| Aspect | Details |
|————————–|—————————————————————————–|
| single Network Project | Discussions between KKR and open Fiber, supported by the Italian government. |
| Earnout Potential | Up to €2.5 billion for TIM, with a 40% probability estimated by Intermonte. |
| Employment Concerns | uilcom raises issues about job security and project sustainability.|
| Regulatory Changes | Potential adoption of Rab-style rules, impacting tariffs and valuations. |
Looking Ahead
The coming months will be critical for the Italian telecommunications sector as stakeholders navigate the complexities of the single network project. While the financial incentives are clear, the government and industry leaders must address the concerns of workers and ensure a balanced approach to regulation.
As Uilcom prepares to meet with government ministers, the outcomes of these discussions could shape the future of Italy’s digital infrastructure and its workforce. The stakes are high, and the decisions made today will have lasting implications for the country’s economic and technological landscape.
Editor: The Italian telecommunications sector is undergoing notable changes, notably with the single national network project. Can you provide an overview of the current developments and their implications for TIM, KKR, and Open Fiber?
Guest: Absolutely. The single national network project is a pivotal initiative strongly supported by the Italian government. recently, KKR has shown willingness to engage in discussions with open Fiber, which aligns with the government’s vision. Analysts at Intermonte suggest that a construction site for this project could begin as early as February. This collaboration could unlock significant industrial synergies and financial gains, particularly for TIM, which stands to benefit from an earnout of up to €2.5 billion by the end of December 2026.
Editor: That’s a significant financial incentive. What are the key factors driving this potential agreement?
Guest: The primary driver is the alignment of interests between KKR and the Italian government. The government is keen on creating a unified digital infrastructure to enhance connectivity across the country.For TIM, the potential earnout represents 75% of the industrial synergies, which could add approximately 5 cents per share to its valuation. Intermonte estimates a 40% probability of this outcome,which would bring TIM’s target price to 38 cents per ordinary share.
Editor: While the financial prospects are promising, there are concerns about employment security.How is the labor union Uilcom responding to these developments?
Guest: Uilcom has raised valid concerns about the sustainability of the project and the protection of workers’ employment.They emphasize that the project must ensure job security for employees of FiberCop and TIM.To address these concerns, Uilcom has scheduled a meeting with Minister Urso and Minister Calderone on February 12th.This meeting is crucial for resolving unanswered questions and ensuring that the workforce is not adversely affected.
Editor: Regulatory changes are also a significant aspect of this project. Could you elaborate on the potential adoption of Rab-style rules and their implications?
Guest: Certainly. The establishment of a single regulated operator could pave the way for the adoption of a Rab-style incentive regulatory regime. This approach could maximize the earnout in favor of TIM, but it may also lead to higher wholesale tariffs.These tariffs could be passed on to end customers, possibly increasing costs for consumers. On the flip side, the potential for higher returns on invested capital could result in a significant re-rating of the valuation multiple, with expectations in the 15-20x EBITDA range.
Editor: What are the key takeaways for stakeholders as they navigate these complexities?
Guest: The coming months will be critical. Stakeholders must balance the financial incentives with the need to protect employment and ensure regulatory fairness. The outcomes of the discussions between Uilcom and government ministers will play a crucial role in shaping the future of Italy’s digital infrastructure. The decisions made today will have lasting implications for the country’s economic and technological landscape.
Key Points at a Glance
| Aspect | Details |
|---|---|
| Single Network Project | Discussions between KKR and Open Fiber, supported by the Italian government. |
| Earnout Potential | Up to €2.5 billion for TIM,with a 40% probability estimated by Intermonte. |
| Employment Concerns | Uilcom raises issues about job security and project sustainability. |
| Regulatory Changes | Potential adoption of Rab-style rules,impacting tariffs and valuations. |
Conclusion
The single national network project represents a transformative chance for italy’s telecommunications sector. While the financial incentives are substantial,stakeholders must address employment concerns and regulatory challenges to ensure a balanced and lasting outcome. The decisions made in the coming months will shape the future of Italy’s digital infrastructure and its workforce.
