Photo:VCG

Telecom Italia (TIM) General Manager Pietro Labriola outlined to the company's directors his draft plan to revamp the former phone monopoly, an alternative strategy to weigh against a takeover approach by US fund KKR.

TIM is yet to respond to KKR's non-binding 10.8 billion euro ($12.28 billion) proposal, which is contingent on support from TIM's board and Italy's government. 

Labriola's final plan, which the board will examine on March 2 when it meets to discuss full-year results, will provide a benchmark for TIM to evaluate the price of 0.505 euros per share KKR indicated in its November 19 proposal.

Doubts over whether KKR's tender offer will materialize has weighed on TIM shares.

Labriola is studying a range of options to KKR's offer, two sources familiar with the matter have said, looking in particular at splitting TIM's infrastructure and services assets to try and appease all of the group's stakeholders.

Under the plan, TIM would spin off its services and network assets in a way that would see each assume a portion of the company's debt and equity, the sources said.

A veteran TIM executive, Labriola has been running the group's prized Brazilian operations since 2019.

Tuesday's informal briefing with directors was seen as a key step for Labriola to secure wide board support for the CEO role, which became vacant in November when Luigi Gubitosi was ousted after a string of profit warnings.

"The atmosphere was positive and constructive and this bodes well for Labriola's appointment as CEO," a source close to TIM said.

Competition has hammered debt-laden TIM's profit margins at a time when it needs to invest to upgrade its network -- Italy's main telecoms infrastructure and a strategic asset for the country.

Labriola's nomination has been promoted by TIM's single largest investor Vivendi, which has said that KKR's offer does not sufficiently value TIM.

CDP, which invested in TIM to oversee its network assets, recently called on TIM to revive a plan to merge them with those of fiber-optic rival Open Fiber, which is 60 percent owned by CDP.

Reuters