Tim close to a deal with KKR to create a "national champion" of fiber optics. An indiscretion that on the morning of February 13 pushed up Telecom Italia shares, taking them to the top of the Ftse Mib. At 11.30 the stock scores +2,59 at 0,519 (max intraday +3,2% at 0,5223 euro) and moves away from the lows of 0,478 reached on February 3rd.
According to rumors reported by Bloomberg, the American private equity fund KKR should support Tim in the purchase of Open Fiber also investing in the secondary network of the group led by Luigi Gubitosi. The project, if implemented, will lead to the creation of a single fiber network infrastructure, a dossier that has been talked about for months.
Open Fiber is the subsidiary of Enel and Cassa Depositi e Prestiti which is responsible for the construction of the ultra-broadband fiber optic network throughout the country. Last June Tim and the two shareholders announced the signing of a non-disclosure agreement, starting negotiations on a possible integration between Tim's fiber network and that of Open Fiber. However, several critical issues have slowed down the negotiations, including Enel's reluctance to sell its share of Open Fiber. A few days ago, Enel's number one, Francesco Starace, reiterated: “We don't feel pressure to sell. We are very satisfied with our participation in Open Fiber and are now starting to invest in optical fiber in other countries as well, particularly in South America. We see synergies in this engagement and have no intention of parting ways with the stake in Open Fiber which has also grown significantly in value."
According to Bloomberg, for several weeks Tim would be in contact with some of the most important international infrastructure funds in order to push on the single fiber network. The choice, underlines the news agency, would have fallen on KKR due to the willingness of the Ua fund to direct a minority share of its investment to Tim's secondary network (the one from after the cabinets reaches the homes), rated between 7 -7,5 billion.
“The obstacles to the deal with OF would still be different (regulatory, negotiating), but the dossier would have an unexpected acceleration and the entry of KKR would in any case constitute a positive intermediate step, as it could bring out a further asset (in addition to Inwit and to data centers) on which there is a misalignment between multiples of the group and multiples of the controlled assets. A valuation of the network asset at 10 times the Enterprise Value/EBITDA ratio would reveal around 3,5 billion of extra value for the group, as well as opening up consolidation hypotheses that would allow capex synergies”, comments Equita Sim.
Returning to Piazza Affari, the Telecom Italia shares also contribute to push upwards the shares quarterly report published on 12 February by the Brazilian subsidiary Tim Participacoes, which reported better-than-expected quarterly earnings thanks to an increase in average consumer spending. Tim Brasil closed the fourth quarter with profits of 756 million reais (174,5 million dollars), exceeding the 599,4 million expected by the market consensus. Revenues grew by 2,9% thanks to the sale of high-value services, such as high-speed Internet connections, and to the increase in the monthly expenses of customers with prepaid cards. Costs fell by 0,7%, while EBITDA amounted to 2 billion reais, slightly below expectations (2,2 billion) but still at the highest level ever recorded by the company. Shares of Tim Participacoes jumped 17% yesterday after stronger-than-expected results and after the chief executive said consolidation in Brazil could accelerate in 2020.
