How and why the Court of Auditors exploits the government’s project with KKR on the TIM network
Analysis of the Court of Auditors' findings regarding the Mef's intervention on the TIM network. The hypothesis of the holding with the American fund KKR does not appear to be contemplated by the Giorgetti decree. The speech by Dario Denni, founder of Europio Consulting
The attention of the Court of Auditors on the operation that the Mef would like to undertake with KKR on the TIM network is surprising for the depth of the technical-legal observations rather than for the economic ones that the accounting judiciary proposes to the government, in a very clear and rather effective way even though we are faced with a non-binding opinion.
As a preliminary point, it is noted that in the supplementary report sent by the Ministry to the Court and in the other investigative activities, a much more complex operation would emerge than that authorized by the Prime Ministerial Decree which limits the State's intervention to a shareholding in NetCo and does not contemplate other hypotheses. In fact, from the supplementary note it would appear that the Mef would like to participate in a holding together with KKR and other investors which would control a corporate vehicle which in turn will finalize the operation on NetCO, following the transfer of Tim's network to Fibercop .
Since the Prime Ministerial Decree authorizes only a simple participation of the Mef in Netco and regularly allocates the funds, the Court of Auditors notes – and this is the most important legal point of the entire opinion – that any other more complex operation not contemplated by the Dpcm could be null and void pursuant to the Consolidated Law on publicly held companies. Serious damage if this were true.
Therefore it is clear that the opinion of the Court of Auditors was limited only to analyzing the provisions of the Prime Ministerial Decree, being unable in any way to analyze more complex corporate hypotheses which are not foreseen in it. This alone is sufficient to assign a different value to the resulting opinion since, since the exact operation that is intended to be carried out is not yet firm, the Court of Auditors can only limit itself to analyzing the one envisaged by the Prime Ministerial Decree, as up to now it is the The only hypothesis frozen by a law even if perhaps it is not exactly the one that should be realized on the basis of the establishment of two further companies distinct from Netco.
Now it is clear that Fibercop already owns Tim's secondary network. If Netco were to be created, Tim's primary network would also end up in Fibercop in which Teemo Bidco, a company controlled by Kkr, is already present. It follows that the Prime Ministerial Decree would seem to focus only on the participation of the Mef in Netco following the extension of Fibercop from the secondary network to the entire Tim primary network. A hypothesis which, however, does not perfectly match with the MEF's supposed participation in a holding with KKR and other private investors, and which in turn controls a vehicle that owns Netco. Complicated but very clear.
When going on to evaluate the individual economic elements, net of the fact that the perimeter of the operation is not known, defects of completeness in the information clearly emerge which therefore do not make an in-depth analysis possible. Therefore, even in this case, the Court's opinion can only be limited to recalling the legal principles that underlie the legitimacy of State intervention in the economy, and in particular in this special sector. Therefore it is clear that it is not enough to declare that the business itself is profitable but it will be necessary to demonstrate that it is economically, financially and patrimonially sustainable. And to do so, the adverse risks to the operation you want to carry out must also be taken into account. A brief analysis of the legislation on state aid also follows this path, which in referring to the market operation makes clear references to an economic entity that would have an interest in carrying out a similar operation, or, analogously, it will be necessary to refer to a public intervention operation that has the characteristics suitable for demonstrating the conditions of legitimacy of the intervention.
These latter issues appear to be of competitive interest and for a more in-depth analysis we will have to wait for the opinion of the Antitrust Authority, which is also inevitably called upon to provide an opinion. Non-binding opinion, as always, but far from irrelevant.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/come-e-perche-la-corte-dei-conti-sfruculia-il-progetto-del-governo-con-kkr-sulla-rete-tim/ on Sun, 22 Oct 2023 07:41:42 +0000.