Tim terminates contract with Inwit

The Tim note underlines that "the decision is part of the path of optimisation of the infrastructure cost structure undertaken by the company, consistent with the initiatives recently announced to the market, and falls within Tim's ordinary operational and industrial options in the management of its infrastructure perimeter and its commercial relations". It adds that Tim will begin negotiations with Inwit to agree on 'a multi-year migration plan that will ensure operational continuity after the expiry of the contract in compliance with the reciprocal contractual obligations enshrined in the Msa'.

Inwit's network, which today has 26 thousand sites, was formed with the best existing tower parks. For the two operators, who a dozen days ago announced a non-binding joint venture to directly build 6,000 additional sites together, it is not easy to replace their former infrastructures in the short term, while for Inwit, which derives at least 80 per cent of its turnover from Tim and Fastweb, it is not easy if not impossible to replace its two main customers, even if the migration does not necessarily have to be completed by the contract's expiry date.

Before arriving at the cancellation (and the paperwork), both Fastweb and Tim had tried, without success, to discuss the economic conditions of the contract, which the two operators considered to be above the European average.

Different is the position of Inwit, which on Friday held another conference call with analysts, the second in a week, in the face of a situation that has sent the stock plummeting on the stock market. "It is important to clarify that all our prices are in line with the market," Inwit CEO Diego Galli said during Friday's call. "They are indeed more advantageous and well below the European average, because the Msa fee also includes exclusive rights for the benefit of the anchors, such as the right of veto and extra reserved space on existing sites, which are not part of the standard Msa terms in international bechmarks. Galli also reiterated the quality of the infrastructure. '35% of our sites are in unique locations,' he emphasised, 'and more generally about 75% of our network is not replicable.

In any case, Tim has still left the door open to dialogue, pointing out in its statement that it is willing to evaluate with Inwit 'an overall review of the economic and service conditions of the agreement in the interest of all stakeholders and with a view to continuing the development of the country's strategic infrastructure investments'.

For the use of the towers, Tim was paying just over 320 million per year in 2020, then - due in particular to the post-Covid inflation spike - the bill rose to around 450 million this year, with no possibility of passing on the inflation increase to retail customers.

It remains to be seen whether a meeting point compatible with the highly leveraged private equity deal mounted on Inwit, with the Ardian fund in the driver's seat, can be reached. According to Bloomberg reports, the French private equity fund sent a letter to Tim on Friday warning that the duration of the relationship until at least 2038 was the basis of the transaction through which Ardian took over control of the company vehicle that was previously also owned by Tim.

For Inwit, however, "the termination is without legal basis" - is the reply that arrived in the evening - and the company "will oppose it in any competent forum". In the statement, Inwit specifies that "the effectiveness of the judicial outcomes regarding the Master service agreement between Inwit and Fastweb is limited to the latter and does not extend to Tim" and reveals that in January it had proposed arbitration to resolve differences of interpretation regarding the duration of the contract, receiving as a response from Tim - says Inwit - that "the issue of contractual duration is not currently of any relevance".

Inwit, too, says it is willing to sit at the table, but to 'evaluate improvements to the current contract structure, in continuity with the original provisions of the master service agreement'. Smoke signals on contracts whose contents, however, are only known to the parties who signed them.