In a landmark decision, U.S. investment firm KKR received unconditional EU antitrust approval on Thursday for its acquisition of Telecom Italia’s fixed-line network, a deal valued up to 22 billion euros ($24 billion). This transaction marks the first instance of a former phone monopoly in a major European country divesting its landline grid.
The European Commission, acting as the EU antitrust watchdog, conducted a thorough investigation into the potential impact of the deal on the wholesale broadband access services market in Italy. “The Commission investigated the impact of the transaction on the market for wholesale broadband access services in Italy and concluded that it would not significantly reduce the level of competition,” the Commission stated.
Read more: EU to Decide on KKR’s Telecom Italia Buyout by May 30
Following the announcement, Telecom Italia (TIM) shares rebounded, closing Thursday’s session 1.5% higher, reversing earlier losses. KKR has proactively addressed concerns from Telecom Italia’s competitors regarding existing contracts established after the creation of FiberCop, Telecom Italia’s last-mile grid unit. Sources familiar with the matter informed Reuters that KKR has pledged to maintain these contracts on the same terms and prices, alleviating EU concerns.
Additionally, the Commission noted that the master services agreement (MSA) set to govern the relationship between NetCo (the grid acquired by KKR) and TIM post-transaction is not a crucial part of the deal, as it does not grant KKR control over NetCo.
This network sale is part of a government-supported strategy to reduce TIM’s significant financial burden. With the EU’s approval, the deal is expected to be finalized soon, as confirmed by Italy’s Economy Minister Giancarlo Giorgetti in a statement.
Source: Reuters