Telecom Italia Bid Standoff with Italy

By Daniele Lepido, BNN Bloomberg
February 6, 2024

(Bloomberg) — Telecom Italia SpA is planning to reject Italy’s government bid of up to €750 million ($805 million) for its strategic submarine cable unit Telecom Italia Sparkle SpA and is preparing to push for better terms, according to people familiar with the matter.

The company’s board is expected to dismiss the government’s offer in a board meeting Wednesday and has plans to ask Italy’s Finance Ministry for better terms for the entire unit, the people said, asking not to be named as the discussions are confidential. The people added that a final decision has not been taken yet. A representative for Telecom Italia declined to comment.

Giorgia Meloni’s government is trying to take over what it views as a particularly strategic asset beyond Italy.

Sparkle operates over 600,000 kilometers (373,000 miles) of cables connecting countries including Israel and the US. Sub-sea cables are among the main fiber infrastructure that allow worldwide data flow, potentially including sensitive information, across continents.

Telecom Italia has already sold its landline network to KKR & Co. in a €22 billion ($23.8 billion) deal — but Sparkle was intentionally left out of the deal because of its geopolitical significance.

According to the company’s assessment, the unit should be valued at at least €850 million, its book value, the people said. The board already rejected a previous offer for the company, and the two sides are expected to take additional time to negotiate the terms of a possible deal.

Telecom Italia and the government are expected to continue negotiations on an alternative plan that would allow the phone company to keep a minority stake in Sparkle as well as control over daily operations, the people added. Such a possibility is already part of Italy’s government offer for Sparkle, the people said.

Bloomberg News reported in December that Italy was weighing moves to control Telecom Italia’s Sparkle.