Telecom Italia (TIM) has announced the launch of NetCo, its long-awaited business unit for its fixed-line network, which was sold to KKR earlier this month for €28.8 billion.
According to TIM, the newly formed division employs over 20,000 people, 19,000 of whom work in TIM’s Wholesale and Network departments and 900 in TIM’s staff functions.
All of TIM’s fixed-line assets will be included in NetCo, including FiberCop, the business’s “last mile” network, in which KKR already owns a 37.5% interest.
Meanwhile, the agreement does not cover Sparkle, TIM’s underwater cable division and is the subject of separate negotiations between TIM and KKR.
As a result of the restructuring, TIM will employ approximately 17,500 people as of December, including approximately 16,300 full-time equivalents. The sale of NetCo will enable TIM to reduce its existing debt pile of €26 billion by €14 billion.
Vivendi, TIM’s largest shareholder, has expressed disappointment with the sale’s approval, pledging to “use all legal means at its disposal” to challenge the decision. The company claims that TIM’s assets are undervalued, claiming that they are worth €30 billion and are thus undervalued. Despite this, the Italian government has backed the deal, purchasing a 20% stake in NetCo this year for €2.2 billion, citing TIM’s network as critical national infrastructure.
NetCo’s sale to KKR is expected to close next summer.
