Iliad’s hand in Hutchison’s backtracking on the Wind network

14 February 20243 months ago babelfish

CK Hutchison, the Hong Kong conglomerate that owns WindTre, cancels the deal for the 3.4 billion euro sale of the majority stake in the telco's network to the Swedish fund Eqt. Here because

Nothing to do for WindTre's Netco with the Swedish Eqt fund.

The owner of the telco , CK Hutchison Holdings, declared the final word, specifying that the operation announced last May 12 for the establishment of a new company for the network and the sale of a 60% stake in this infrastructure to the fund "has been terminated due to failure to comply with the conditions precedent for closing by an agreed date of 12 February 2024". “As a result, the transaction will not take place.”

The operation with EQT had an enterprise value of 3.4 billion and would have been the first infrastructure spin-off operation even before the sale of Tim's Netco to Kkr .

In reality, the unbundling of the operator's network launched in 2017 following the merger of Wind and 3 Italia, part of the Ck Hutchison group and led today by Gianluca Corti and Benoit Hanssen, had already appeared uncertain for some time, after the three-month delay in November. Not to mention that the trade unions were alarmed by the unknowns regarding the sale of the infrastructure announced by Wind.

But more than union pressure, it seems that the operation was influenced by third-party agreements relating to 5G with Wind Tre's rivals. Just a year ago Windtre announced the completion of the closing for Zefiro, the 50-50 joint venture with Iliad to share and manage their respective mobile telephone networks, including 5G ones, in the less densely populated areas of the national territory.

Has the sector consolidation operation failed because of Iliad?

All the details.

THE WINDTRE-EQT OPERATION FULFILLED

Let's start from the beginning: last May CK Hutchison had planned to transfer the network equipment and wholesale mobile and fixed communications services activities of its Italian Wind Tre mobile phone business to the Swedish Eqt Infrastructure fund.

The deal saw EQT acquire a 60% stake in Wind Tre's new network venture, comprising radio antennas, base stations and associated contracts. The agreement had set an enterprise value for the joint venture company of 3.4 billion euros.

But at the closing deadline, the Chinese owner of Wind announced the interruption of the operation with EQT "due to failure to comply with the conditions precedent".

However, the Hong Kong conglomerate, the note continues, "will continue to explore possible alternative infrastructure transactions to bring value to the company, including possible infrastructure transactions with EQT Infrastructure should the appropriate opportunity arise."

THE POSITION OF THE SWEDISH FUND

Position also shared by the Swedish fund: "Eqt Infrastructure will continue to explore alternative infrastructure transactions, including with CK Hutchison, should further opportunities arise" we read in the press release, without precluding the adoption of a new approach for a spin-off agreement of Wind Tre's infrastructures.

“A coincidence that makes one think that the parties have not left each other badly at all (therefore not closing the door to a possible new attempt in the future)”, observes Il Sole 24 Ore today.

THE PAW OF ILIAD

The operation would have been hindered by existing network sharing agreements with Wind Tre's rivals, Iliad and Fastweb.

As already mentioned, Iliad and Wind Tre are partners in the equal joint venture created in January 2023 , Zefiro, creating a new 5G wholesaler focused on providing 5G coverage for rural areas of the country. “The agreements between the two operators contained mandatory renegotiation clauses if one of the two contractors changed ownership. And Iliad would not have failed to point out that the sale of the Wind network to the Swedish fund would have been included in the case, requiring a review of Zefiro's assets" reports the Corriere della Sera adding that "A similar debate would also have concerned another Wind alliance, the one with Fastweb on 5G”.

The CK Hutchison-owned telco also has a 5G network sharing deal with Fastweb that would be affected by the deal, although at the time it looked like the matter would be resolved quickly.

According to the Confindustria newspaper, the Hong Hong conglomerate "at a certain point had to deal with an Iliad which put on the table the clauses contained in the agreements in the event of a change of ownership structure. And at the same time also the need to review those agreements."

“Hence CK's decision to stop the deal without therefore giving up «exploring possible alternative infrastructure operations», perhaps with Eqt itself and involving Iliad and Fastweb” comments the Corriere .

THE PURCHASE OF OPNET

For a consolidation operation that did not succeed, another has set sail.

At the beginning of the month Wind Tre announced the acquisition of the activities of OpNet (formerly Linkem), a specialist in FWA (Fixed Wireless Access) for the wholesale market.

The operation, "subject to government and regulatory approvals", will be carried out "through the purchase by Wind Tre of 100% of a company into which OpNet will contribute the relevant business unit, with the exclusion of Tessellis and the other companies controlled or participated by OpNet".

But that of OpNet and the network part of the former Linkem is certainly an opportunity to strengthen itself in the development of 5G for the operator controlled by Ck Hutchison, as well as a first move towards the consolidation of the Italian mobile market, much hoped for so far .

This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/lo-zampino-di-iliad-nella-marcia-indietro-di-hutchison-sulla-rete-wind/ on Wed, 14 Feb 2024 13:58:28 +0000.