MILAN (Reuters) – Private equity firm KKR is eyeing a further investment in Telecom Italia’s fixed-line network as Italy’s main telecoms group weighs options for its assets in an effort to appease top investor Vivendi, three source close to the matter said.
Telecom Italia’s (TIM) CEO Luigi Gubitosi is under siege by Vivendi, after TIM issued two profit warnings in three months, cutting its free cash flow outlook and stoking concerns about its 22 billion euros ($25 billion) in net debt.
With a plan to merge TIM’s core fixed-line assets with those of state-backed rival Open Fiber on hold, Gubitosi has been reviewing other options to raise money from TIM’s assets while the company wrestles with ferocious competition on its home turf.
Gubitosi, whose plan centres around the creation of a new company housing TIM’s various assets, has pledged to report back to the board about progress on the scheme. One source said he was holding discussions with potential investors, including KKR.
The infrastructure arm of U.S. fund KKR last year bought a 37.5% stake in TIM’s so-called last-mile fixed network connecting street cabinets to people’s homes.
KKR is keen to gain more exposure to TIM’s fixed landline as Italy prepares to spend billions of euros of European Union recovery funds to boost digital connectivity, the sources said.
KKR declined to comment. A spokesperson for TIM said the company was not currently considering cutting its stake in FiberCop, the firm that holds the last-mile grid.
A spokesperson for Vivendi said it was not informed of the KKR move.
(Reporting by Giuseppe Fonte, Elvira Pollina, Pamela Barbaglia and Valentina Za; editing by Gavin Jones)
