Share sell-off at Inwit following appeal against Fastweb. Brokers are banking on a settlement

(Il Sole 24 Ore Radiocor)- Selling pressure onInwit, which is one of the worst-performing shares on the Milan Stock Exchange. Weighing on the share price is the decision by the Milan Court to reject the interim application in which the company sought to suspend the effects of Fastweb’s termination of the MSA. As pointed out by analysts at Equita (which has a ‘Hold’ rating on the share with a target price of 7 euros), unlike what happened in the case of Telecom Italia case, ‘this time the rejection is based on the absence of fumus boni iuris – that is, the low probability that Inwit’s claim is, at first glance, well-founded – and not on the lack of the requirement for urgency (periculum in mora)’. Two days ago, the Court had dismissed the application in which Inwit sought to urgently suspend TIM’s withdrawal from the Master Service Agreement binding the two companies.

Returning to the decision on the Fastweb case, the experts also believe that the main factor behind the share price’s negative reaction even on the eve of the decision “is a passage in the order stating that any transfer of shareholdings could constitute a change of control relevant to the duration of the contract”. Equita points out that the crux of the dispute is precisely the change of control over Inwit, which, according to Fastweb, had already taken place in 2020, following the “transfer” of Vodafone’s stake in Inwit between companies within the Vodafone group, whilst, according to Inwit, this is not a material event as it did not trigger a takeover bid for the shares, and the material change of control occurred in 2022 following the ‘sale of TIM’s stake to Ardian’.

Following the Milan Court’s decision, Inwit has announced that it will lodge an appeal and continue with the proceedings on the merits. Equita points out that ‘the interim proceedings do not address the substance of the dispute: it is based on the existence of the requirements of periculum in mora (the risk of serious and difficult-to-remedy harm if the ordinary course of justice were to be followed) and fumus boni iuris (that the claim appears, at least at first glance, to be well-founded). Therefore, the order does not prejudge the outcome of the main proceedings (not expected before 2029) and, for this reason, we believe that the impact of the ruling on Inwit will be limited”.

According to Intermonte (which has a ‘neutral’ rating on the share and a target price of 7 euros), Inwit believes that the court’s decision ‘contradicts the principles of legal doctrine and case law regarding the systematic interpretation of the contract and the overall conduct of the parties’. As Inwit points out, the brokers note, the order fails to take into account that Vodafone, at the time, expressly informed Inwit, Consob and the market that the 2020 transfers of shareholdings were to be regarded as internal reorganisations not relevant to the agreement with Inwit itself. The company will promptly lodge an appeal with the Milan Board and will continue with the proceedings on the merits. According to experts, “the unfavourable ruling was expected, following the similar approach already taken in the proceedings involving TIM. Inwit emerges weakened on both fronts and will have to await the judgment on the merits, which may not be delivered before 2029. We remain convinced that an out-of-court settlement is the best solution for everyone: it would give Inwit visibility over recurring revenues and provide TIM/Fastweb with certainty regarding costs, whilst avoiding years of litigation with an uncertain outcome. The industrial and regulatory landscape further supports the case for a negotiated solution: the TIM-Fastweb joint venture for 6,000 new sites is still awaiting the competition authority’s approval, whilst there remains a need to accelerate investment, not least in view of the frequency renewal process.