Poste Italiane has launched a €10.8 billion ($12.5 billion) bid to acquire full control of Telecom Italia, a move that would return the company to government ownership three decades after its privatization. The all-cash and stock offer values Telecom Italia at approximately €0.635 per share, representing a 9% premium over its closing price last Friday. Poste Italiane, the state-controlled postal service, already holds a 27% stake in Telecom Italia's ordinary shares.
Italy's market watchdog, Consob, has approved the offer document allowing the takeover bid to proceed. The acceptance period for the offer will run from July 20 to September 11, covering all ordinary Telecom Italia shares traded on Euronext Milan, excluding those already owned by Poste Italiane. The Italian Competition Watchdog has also approved Poste Italiane's offer.
Poste Italiane's CEO has stated that a good premium was offered to Telecom Italia shareholders. This acquisition aligns with Italy's broader strategy to develop its technology infrastructure and protect digital sovereignty, leveraging Poste Italiane's extensive network and digital transformation efforts. The combined entity aims to build distributed computing infrastructure, enhance cloud and cybersecurity services, and expand beyond Telecom Italia's traditional consumer telecom business into higher-margin corporate clients. Analysts like Claudio Baretti of AlixPartners note the strong commercial rationale for the combination, which could lead to a wider range of services for a larger client base, improving customer retention and increasing switching costs.
Telecom Italia has faced significant debt and intense price competition since its privatization, hindering its ability to invest in infrastructure upgrades. Despite reducing its debt-to-core profit ratio and increasing revenue per employee with the 2024 sale of its fixed-line network to KKR, sustaining future investments in 5G and cloud services would be challenging. Italy's installed data center capacity is only about 15% of Germany's, and the country lags in advanced 5G networks necessary for AI-powered services. A leading investor noted that consolidating the number of mobile network operators in Italy, which currently includes Vodafone-Fastweb, WindTre, and Iliad, is crucial for making capital-intensive 5G networks viable.
