The close of the deal means that TIM will be able to reduce its net financial debt by €13.8 billion, in line with its plans at the start of discussions almost three years ago.
As of its Q1 2024 results, TIM reported net financial debt after lease of €21.4 billion.
The reduction of €13.8 billion from this figure means that TIM is “aligning leverage to best-in-class peers.”
It expects to see its leverage ratio (Adjusted Net Debt / Organic EBITDA AL) reduce to around 2x by the end of 2024 and between 1.6 and 1.7x by 2026.
TIM’s fixed-line network covers over 88% of Italy’s households and spans 23 million kilometres.
TIM will maintain access to the network through a 15-year term Master Service Agreement (MSA), which is renewable for a further 15 years.
Under the general conditions of the MSA the newly formed company, dubbed NetCo, will act as a “wholesale-only” operator, selling access and B2B services.
Meanwhile, TIM will act as a “retail” operator, reselling services purchased from NetCo to retail customers.
TIM are hoping that the transaction will allow it to better compete in the consumer and enterprise markets in Italy.
It says the service agreement with Netco enables it to operate under a new business model that will allow the Group to compete more effectively with a stronger focus on the industrial and commercial aspects of its business.
“The completion of the transaction with KKR and the Italian Ministry of Finance is the result of two and a half years of intense work, during which we have improved the management of TIM and identified industrial and financial solutions that will enable us to meet future challenges”, said Pietro Labriola, CEO of TIM.
Italian infrastructure fund F2i will also own a 10% stake in the venture. Abu Dhabi's sovereign wealth fund ADIA will own 20% of the company and Canada Pension Plan will hold a 17.5% stake.
