Inwit volatile, legal clash with Fastweb+Vodafone

  (Il Sole 24 Ore Radiocor) - Another difficult session for Inwit, with the stock opening down more than 10% and then being temporarily suspended from trading before resuming trading a few minutes later. A volatile trend that follows the strong rise of the eve, weighed down today by the news that Fastweb+Vodafone has notified the termination of the Msa (Master Service Agreement) with Inwit "in full compliance with the contractual provisions", reads a note. According to Fastweb's interpretation, the agreement will formally end at the end of March 2028. The parties will initiate a multi-year migration plan in line with the provisions of the MSA in order to ensure business continuity until March 2028 and beyond.

The migration plan will be based on agreements with third-party passive infrastructure providers and initiatives involving Fastweb+Vodafone. The decision to terminate the Msa stems from the realisation that Inwit's costs of services are not in line with market benchmarks, as well as the company's unwillingness to engage in a formal discussion aimed at aligning them, with impacts on investment capacity in mobile networks and the roll-out of 5G. The company plans to reallocate resources towards new infrastructure, network quality and coverage, against approximately 1 billion in annual investments.

On the other hand, Inwit claims that the agreement is valid until 2038, calling Fastweb+Vodafone's arguments 'unfounded and specious'. Hence the start of the legal clash: Fastweb+Vodafone has taken legal action "to assert its contractual right to terminate the agreement", while Inwit, on the other hand, has defined Fastweb+Vodafone's notice of termination as "devoid of legal foundation and as such will be challenged in any competent forum". The company will therefore "take steps to request with immediate effect the Court of Milan for a precautionary measure to inhibit the effects of the notice of termination".

"The termination was partly expected, in light of the position already expressed by Swisscom/Fastweb and the announcement of the Jv with Tim for the autonomous construction of around 6,000 new sites, an initiative that could represent a structural threat to Inwit's future business," Intermonte analysts comment, pointing out that for its part, Tim "has not at the moment expressed any intention to terminate the existing Msa, but has not ruled out the possibility of renegotiating the contract when it expires".

The experts point out that in their target price of EUR 6.50 per share they have already incorporated the revised outlook communicated by the company last week, but also the assumption of a 25% reduction in the current Msa with Tim and Fastweb+Vodafone from 2038 onwards. "We believe that an out-of-court settlement between the parties could represent a base scenario (reasonable discount in the 15% area for each Msa before 2038, i.e. around 50-60 million for each operator)," the analysts write. Since the announcement of the jv between Tim and Fastweb+Vodafone to date, Inwit's share price has lost over 18%.