Telecom Italia (TIM) has completed the sale of its domestic fixed line access network to KKR in a deal valued at up to 22 billion euros ($23.6 billion). The deal is aimed at slashing TIM’s debt and revamping the ailing company.
The transaction will be resulting into a reduction of net financial debt by €13.8 billion.
The expected deleverage upon completion, pending customary post-closing adjustments, is confirmed at €14.2 billion.
The business relationships between NetCo and TIM are regulated through a 15-year term Master Service Agreement (MSA), renewable for a further 15 years. The services comprised in the MSA will be provided at market prices and without any minimum purchase commitments.
TIM will compete more effectively in the consumer and enterprise markets in Italy, thanks to a stronger focus on the industrial and commercial aspects of its business and thanks to a solid financial structure.
Meanwhile, Telecom Italia CEO Pietro Labriola earlier said it’s not seeking a partner for its domestic consumer unit as the telecoms firm is focused on growing businesses left after the sale of its grid assets.
Following the transaction, TIM’s total headcount will decrease from 37,065 to 17,281, equal to 16,135 full-time equivalents. TIM will shift more than half of its domestic workforce on to the network venture, leaving it with some 16,000 employees in Italy, Reuters news report said.
TIM’s fibre and copper landline network covers nearly 89 percent of the country’s households and its fibre cable stretches over 23 million kilometres (14.3 million miles) across the country, making it the main piece of Italy’s telecoms infrastructure.
Leading TIM shareholder Vivendi is challenging TIM’s decision to sell the network in courts and questioned the sustainability of the business left behind.
