Telecom Italia will split activities to attract new partners

Telecom Italia will split activities to attract new partners

by Elvira Pollina

ROME (Reuters) – Telecom Italia (TIM), Italy’s biggest telecommunications operator, presented a strategic plan on Thursday to separate its fixed-line network from its services business in hopes of raising cash and reducing debt.

TIM, heir to the former national telephone monopoly, has a net debt of 23 billion euros resulting in particular from numerous acquisitions financed by debt.

At the same time, the group is facing a contraction in its revenues in a particularly competitive domestic market.

According to the strategic plan presented Thursday, TIM will split its subsidiary Sparkle, which brings together fixed telephony and submarine cable infrastructures, from the rest of its activities and this new company, called NetCo, will assume around 11 billion of the group’s debt. .

TIM is counting on this split, along with other transactions such as the sale of a minority stake in a newly created business services unit, to bring its net debt below five billion euros.

The reorganization also involves a potential deal to combine TIM’s landline networks with those of its smaller competitor Open Fiber, controlled by the Italian Caisse des Depots (CDP).

“The combination with Open Fiber remains the priority and preferred option (…) but only if it materializes under attractive conditions for both shareholders and creditors”, underlined TIM in presentation documents, without excluding other avenues such as the sale of a minority stake in NetCo.

TIM also explained that its service business – which combines its domestic operations and its Brazilian subsidiary TIM Brasil – would be divided into two units, each of which will have specific financial objectives.

Alongside this branch dedicated to individuals, the unit dedicated to companies will combine connectivity services for large private and public customers, as well as cloud, cybersecurity and Internet of Things services.

“This plan will allow (TIM) to improve its operational performance with a specific economic and financial objective for each entity and to attract new industrial and financial partners”, declared the operator.

(Report Elvira Pollina; French version Jean-Stéphane Brosse and Myriam Rivet, edited by Bertrand Boucey)

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