The Italian government has put forward a bid valuing TIM’s Sparkle business at EUR 700 million. This offer follows a lengthy negotiation process, with the Ministry of Economy and Finance (MEF) initially submitting a formal bid at the end of January, just before a deadline set by the Italian incumbent. However, rather than concluding the takeover process, TIM rejected that initial bid a week later, seeking a higher valuation.
Until now, TIM had not disclosed the amount of the government’s offer. Previous reports indicated the first bid was around EUR 600 million, with potential additional variables totaling up to EUR 150 million. TIM’s latest announcement highlights the EUR 700 million valuation as a fixed figure, without additional variables.
In a statement, TIM announced it received a non-binding offer from the MEF and Retelit, a subsidiary of Asterion Fund, to purchase Sparkle. The proposal is valid until October 15 and will be reviewed by TIM’s Board of Directors after completing preliminary evaluation activities.
Interestingly, while TIM mentions Retelit, there is no reference to investment group, KKR, which was previously expected to collaborate with the government on this bid. KKR recently completed the acquisition of TIM’s NetCo business, raising questions about their involvement in the Sparkle offer.
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Sparkle: Key to TIM’s ESG and Quantum Innovations
Sparkle plays a vital role in TIM Group’s ESG reporting, specifically enhancing resource efficiency, minimizing emissions, fostering a sustainable supply chain, advancing digital technology, and addressing the gender gap. Moreover, it has introduced several unique initiatives, mainly focusing on social aspects, such as diversity and inclusion, and has developed ESG governance tools that facilitate stakeholder engagement.
It operates a global network of subsea cables exceeding 600,000 km, facilitating data transmission worldwide.
The Italian Treasury aims to acquire Sparkle, recognizing the company as a strategic asset due to its critical role in transmitting data across the Mediterranean and the Americas.
This news follows Sparkle’s recent success in completing a quantum-focused project, collaborating with TIM brand, Telsy, to transmit data secured by Quantum Key Distribution (QKD) technology. This highlights the integration of Quantum Arqit’s technology using Symmetric Key Agreement (SKA) into Sparkle’s advanced network infrastructure to enhance encryption methods for international data transmission.
Also Read: Sparkle Successfully Trials Quantum-Encrypted VPN
Ongoing Evaluation Process
Although this non-binding offer is valid for a short period, reports suggest the evaluation process could extend into next year. It could potentially take three-to-four months for TIM’s board to finalize the negotiations and work towards a binding offer. This extended timeline clearly explains the process and its potential outcomes.
Should TIM proceed with the EUR 700 million sale of Sparkle, the funds would likely be directed towards debt reduction, as the telco’s debt is projected to reach EUR 7.5 billion by year-end. Other possibilities include shareholder payouts or new investments to drive growth following the sale of its network business. This potential impact on TIM’s financial standing is a crucial stakeholder consideration.
While the EUR 700 million valuations appear favorable (Sparkle’s book value is EUR 481 million), they are relatively small compared to the NetCo sale. They will have less impact on TIM’s debt than potential payouts from that transaction. Notably, a merger with Open Fiber before 2027 would trigger a payout of EUR 2.5 billion, significantly affecting TIM’s financial standing.