Sparkle, Mef and Retelit's offer confirms valuation at EUR 700 million

As the deadline has passed, Mef has submitted its binding offer for Sparkle, confirming the preliminary assessment of an enterprise value (equity plus debt) of EUR 700m. Tim, which now wholly owns the submarine cable company for international connections, must now evaluate the offer, which is valid until 27 January, following the procedure envisaged for related parties, given that the Mef will take over Sparkle's majority stake, 70%, and is indirectly present in Telecom through Cdp, which holds just under 10% of the ordinary share capital. The case of the national network, which in July passed to the consortium led by Kkr, where the Mef holds a 16% stake, was different.

In the game this time, the Treasury is accompanied by the Spanish private equity fund Asterion, which, however, intervenes through its subsidiary Retelit, even if - it seems - a merger between the two companies is to be ruled out, which could also produce synergies. Asterion-Retelit will have 30%, with minority governance prerogatives.

Asterion is not making its debut in Italy. In the tlc sector it has already had Retelit in its portfolio for some years, to which it more recently added control of Irideos, taken over by F2i, the Italian infrastructure fund led by Renato Ravanelli. Irideos, with Brennercom, was then incorporated by Retelit in August. Last July, in another sector, Asterion took over control of 2i Aeroporti, the holding company that controls the airports of Naples Capodichino, Salerno, Turin, and Trieste, and owns a 36% stake in Sea, the manager of the Milan Linate and Malpensa airports, flanking F2i, which retained control with 51%.

In 2023 Retelit realised revenues of 284.1 million. Sparkle in the same year, before voice traffic, posted revenues of 1025.5 million. From the website of Retelit, which is no longer listed, we learn that the company has 43 thousand kilometres of fibre-optic network (national and international terrestrial connections, but also submarine) and 34 data centres.

As for Tim, the transaction will allow it to exit an infrastructure business that requires continuous investment and no longer falls within the scope of activity of a group that is, inevitably, focusing on services. Telecom Italia Spa holds the stake in Sparkle at EUR 481 million, after the write-down made in the balance sheet last year. Adding Sparkle's net financial debt of EUR 383 million in the financial year 2023 would lead to an enterprise value of EUR 864 million. Assessing capital gains or losses for Tim, however, will have to refer to the company's situation at the time of signing, with possible adjustments at closing. It will still take months because, once the offer is accepted, the transfer of ownership will require authorisation procedures to be undertaken in several countries given the international nature of the company's business.