Telecom Italia, Italy’s CDP Sign Preliminary Single Grid Pact

Sonia Sirletti, Bloomberg News

An entrance to the headquarters of Telecom Italia SpA in Rozzano, Italy, on Tuesday, Nov. 23, 2021. KKR & Co. is setting the stage for a battle of control at Telecom Italia with a 10.8 billion-euro ($12.2 billion) bid pitting the U.S. private-equity fund against France’s Vivendi SE. , Bloomberg

(Bloomberg) -- Telecom Italia SpA reached a preliminary accord with state-backed lender Cassa Depositi e Prestiti SpA for a national single-network project, marking a key step to merge their landline grids.

The carrier signed a memorandum of understanding with Cassa Depositi, its second-largest investor, to combine Telecom Italia’s grid with a similar network owned by smaller rival Open Fiber SpA, which is controlled by Cassa Depositi, the firms said in a joint statement.

The accord was also signed by Open Fiber, and Teemco, a Luxembourg company controlled by US private equity firm KKR & Co., which owns a stake in Telecom Italia’s FiberCop SpA fiber unit, and Macquarie Group Ltd., a minority investor in Open Fiber.

Under the accord, Telecom Italia’s fixed network infrastructure activities will be split from its commercial activities to be merged with the network controlled by Open Fiber. The involved parties plan to sign a binding agreements by the end of October.

Telecom Italia Chief Executive Officer Pietro Labriola, an industry veteran, is working on a turnaround project for Telecom Italia. Under his plan, the firm’s landline assets would be separated and merged with Open Fiber’s, aligning Telecom Italia with a government goal of building a single national fiber network while avoiding duplicate investments. The plan also foresees all commercial services being spun off into a separate unit.

Earlier this year, Telecom Italia rejected a 10.8 billion-euro takeover proposal from KKR.