Tim, here are the government and CDP plans on Open Fiber feared by Vivendi and Kkr

16 June 20222 years ago babelfish

What is happening on the Tim-Open Fiber joint network dossier between government, CDP, Vivendi and Kkr. Facts, numbers, insights and rumors

Tim-Open Fiber?

"Better not to pull the wire too much otherwise it could break and go to the ground".

This is the metaphor circulating in government circles on the tensions relating to the single network dossier.

In fact, it is known that Kkr (Tim's Fibercop shareholder) and Vivendi ( Tim's first shareholder ) are trying to get as high a price as possible for the parts of Tim's network that will flow into the company for the single network with Open Fiber.

But at the Ministry of Economy, and therefore also in Cassa Depositi e Prestiti, a move is envisaged that would crush the aspirations and expectations of the American fund and the French group: to bet everything and only on Open Fiber, is what can be deduced from an article in the Mf newspaper today.

Unlikely scenario? Maybe, but certainly between Palazzo Chigi, Tesoro and Cdp the positions of Vivendi and Kkr are not too welcome, since they tend to equate parameters and evaluations between the two networks – that of Tim and that of Open Fiber – which are not comparable given that that of the company now controlled by Cdp and Macquarie is technologically more advanced.

In fact, an industry analyst tells Startmag : "It is improper to refer to the same evaluation parameters for the two networks because that of Open Fiber is technologically superior to that of Tim di rame even if obviously Tim's shareholder, Vivendi, has an interest to tick a value as high as possible for that of Tim while Cdp has to reconcile the needs because it has a system role as well as being a shareholder of Open Fiber ".

In short, the hottest topic at the moment is precisely that of the enhancement of assets, as Starmag has reconstructed in recent days.

"In terms of valuation, Intermonte assigns the single network a value of approximately 25 billion, estimating the Enterprise value of NetCo 16.7 billion (FiberCop 8.2, primary network 7 and Sparkle 1.5 billion) and that of Open Fiber 8, 6 billion while Equita has a NetCo valuation of approximately 21 billion (5 billion of Equity value). Bestinver values NetCo 16.6 billion and ServCo 15.1 billion (9.1 billion EnterpriseCo, 6.1 ConsumerCo) ”, Il Sole 24 Ore wrote in recent days.

Evaluations, the latter, which remain uncertain given that the perimeter of the TIM network is not clear, which could also include the backbone in addition to the access network and Sparkle, as already mentioned.

For Il Messaggero , on the other hand, "The draft of the project shows that the equity value of Fibercop (secondary network) could amount to 4.7 billion with an enterprise value of 7.7 billion, while the primary network belonging to Tim, would have a valuation between 4 and 8 billion ".

“Open Fiber's valuation was $ 5.3 billion for equity plus $ 2 billion in debt. So 7.3 billion of enterprise value. A multiple, De Puytontaine recalled by 29 times. And the valuation of 10 times the EBITDA for Netco does not hold up like this, ” Il Sole 24 Ore wrote in recent days.

But various analysts have warned against the comparison tout court between the two multiples. In fact, Intermonte wrote that "taking as a reference Open Fiber's ebitda target for 2025 of around 780 million, discounting it at a rate of 6%, this would imply a multiple of 11x paid by Macquarie and Cdp to take over the shares from Of". To this multiple "the Netco would be worth around 24-25 billion" "adds the Confindustria newspaper.

But what do you think of Cdp?

Starting from the valuation of the TIM network at 20 billion (with the 12 billion debt attached), Cdp together with the Kkr and Macquarie funds should pay out another 6 billion to finalize the purchase. "A significant figure, even if not impossible", commented the Republic in recent days.

“But Cdp, being also a shareholder of Tim, could re-propose the split which automatically assigns a value to the two separate companies through the stock exchange. The outlay for CDP and funds would be lower and the match would remain in the hands of Tim (and Vivendi) who would find in the ServCo approximately 8 billion in debt and 2 billion in EBITDA, a relationship that is difficult to sustain ”, underlined Repubblica .

However, “Vivendi with its 24% stake in Tim can exercise a block that would be automatic in the event of an extraordinary meeting (necessary if the splitting route was chosen) which requires the yes of two thirds of those present. On the other hand, with the sale of the asset, an extraordinary assembly would not be necessary ”, Il Sole 24 Ore reported.

But will Tim really not have the copper and fiber optic / Fibercop) network integrated into the company for the unitary network being studied by the government and CDP?

Isn't it useful to deconsolidate part of the debt that weighs Tim and transfer the employees (all or part of it) who are in charge of the network?

These are the questions that underlie the government mood with respect to the positions of Vivendi and Kkr.

This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/tim-open-fiber-vivendi-kkr-cdp/ on Wed, 15 Jun 2022 05:53:39 +0000.