Telecom Italia Approves $20 bln KKR Deal for Fixed-Line Network; Moody's Eyes Upgrade; Vivendi Vows Legal Challenge

Significant Net Debt Reduction Expected from Deal; Vivendi Alleges Decision as "Unlawful" and Threatens Legal Action Against Non-Shareholder Vote-Approved Agreement.

• Telecom Italia's board has approved a $20 billion deal to sell its fixed-line network to KKR, a move that could significantly reduce the company's net debt by $15.03 billion; a decision that has been placed under review by Moody's for a potential ratings upgrade.
• KKR's acquisition is the first instance of a telecom group in a major European country separating from its landline grid. The Telecom Italia's landline network covers nearly 89% of Italy's households with its fibre cable extending over 23 million kilometers across the country.
• Vivendi, Telecom Italia's largest individual shareholder owning 24% of the company, has expressed dissatisfaction with the deal, calling the board's decision 'unlawful' and threatened to challenge it legally. It argues that the KKR bid undervalues the grid and questions the sustainability of the remaining business.
• The Italian government, considering telecoms infrastructure as a strategic national asset, has authorized the Treasury to spend up to 2.2 billion euros to gain a 20% stake in the network alongside KKR.
• The landmark deal, earmarked for completion by summer 2024, expects to reduce Telecom Italia's financial debt by around 14 billion euros and allows the company to focus on its service operations and lucrative Brazilian unit. However, Vivendi's legal threat casts uncertainty over the agreement.

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