LABRIOLA IS WRONG

the Network is not for sale

ALTERNATIVE VALUE CREATION PLAN FOR TIM

aligned with the government's vision

THE NETWORK STAYS IN TIM

it has been in the hands of Italians for 100 years

RESPECT FOR TIM EMPLOYEES AND SUPPLIERS

who work tirelessly to ensure our world remains connected

SINGLE NETWORK LED BY CDP

without any fund from the government

NRRP IS THE PRIORITY

to drive the digitalization of Italy

SHARE PRICE MIGHT GO BACK TO €1

and dividends might be paid again

RIGHT GOVERNANCE IN TIM

respecting all shareholders, including Vivendi and CDP

ALL STAKEHOLDERS ARE WELCOMED

KKR, Macquarie, OpenFiber and others that would like support the project

An alternative value creation plan in the interest of all TIM's shareholders and Italy
TValue is the industrial solution for the relaunch of TIM promoted by Alessandro Barnaba and Stefano Siragusa.

TValue is already a shareholder of TIM and, in alignment with the Government’s vision, is committed to ensuring TIM will remain the main engine to drive the digital transformation of our Country. This includes ensuring timely execution of NRRP, while respecting TIM’s employees and all its suppliers.

TValue has defined a value creation plan for the relaunch of TIM alternative to the financial one of Labriola. TValue addresses the strategic needs of our Country and solves the debt issue without selling NetCo, the network, which has been Italian for 100 years.

TValue promotes the creation of the national grid under the control of CDP thereby maintaining the ownership firmly in the hands of the Government that represents all Italians.

TValue does not ask the Government for any public money.

This solution ensures the best valuation of Network in the interest of all shareholders.

TValue believes that the execution of its alternative plan might drive TIM’s stock price to over €1 within the next 24 months and might lay the foundation for the resumption of dividend payments.

Execution of this plan requires right governance in TIM’s Board of Directors for the benefit of all shareholders, including Vivendi and CDP. TValue encourages the participation of all existing stakeholders, including KKR, Macquarie and OpenFiber, and any future one that is willing to contribute to the success of this opportunity in the interests of the company and our Country.

For this reason, TValue has requested TIM’s Board of Directors to remove Mr. Pietro Labriola from the position of CEO and take all appropriate steps to co-opt Mr. Stefano Siragusa onto the Board and appoint him as CEO to lead the company through the execution of this plan.

In the event of no action taken by the Board, TValue will assess the economic and market conditions to increase the stake it currently owns and represents up to slightly above 5% subject to the prior government authorisation according to the Golden Power rules. Immediately afterwards, a request to convene a shareholders’ meeting to be held as soon as possible would be sent to this board. During this meeting, or any other meeting if appropriate, TValue will ask all shareholders to remove Mr. Labriola and appoint Mr. Siragusa as new director, proposing to grant him the same powers.

LABRIOLA IS WRONG
Labriola's plan to sell the network is industrially wrong, misguided and would destabilize the future of TIM for the following reasons:

  • The carve out perimeters are yet to be defined therefore the transaction will be subjected to multiple changes that will impact the valuation of NetCo vs ServiceCo;
  • Execution timing is unclear and riddled with risk rendering the offer highly vulnerable to fail. All shareholders, stakeholders as well as employees will be in a waiting mode with unforeseeable consequences on the financial stability of TIM and on the NRRP execution;
  • The long term industrial and financial impacts on both the NetCo and on the ServiceCo have not been properly presented and explained, creating doubts on the long-term sustainability of ServiceCo and on the safeguard of its work force;
  • KKR’s proposal provides a valuation of the Network that is insufficient to ensure TIM’s long term sustainability, putting thousands of employees, both in the Company and in the supplier base, at risk and, above all, will further erode shareholder value. We believe that the value of the network surpasses KKR’s current valuation;
  • Governance of NetCo is vague, respect of TIM employees and safeguard of its workforce is unclear, NRRP targets milestones are not a priority;
  • Even if ever technically feasible and executable, yet to be demonstrated and represented, it will require a long process to obtain a final approval by AGCOM, including the Market analysis, the Antitrust regulators approval and scrutiny by the Commission on State Aid.
Until all the above points get defined and clarified, TIM’s future will remain uncertain. Employees will suffer. Suppliers will suffer. The whole Country will suffer.
NRRP will not be relentlessly executed.
In such uncertainty, the stock price is likely to remain low, continuing to erode value for all shareholders.
Furthermore, Labriola’s plan is highly divisive, completely disregards shareholders’ will, creates governance issues, fails to safeguard the workforce, and, most importantly, puts at risk the country’s objectives:
  • It utterly lacks the ability to align the main shareholders, failing to reconcile the market’s interests with the Country’s system interests, which should proceed in alignment
  • It does not fully recognize the historical, industrial, and economic value of TIM’s network as the strategic asset for the digitization of our Country ensuring copper to fibre technical migration and technological upgrade;
  • The Italian Government is asked to invest a large amount of money in a project where it will lack the control and will sit behind another shareholder such as KKR who will have the absolute majority of NetCo;
  • It is so divisive that there are already disagreements between NetCo’s future shareholders:
    • The Italian government wants to preserve industrial investments in network roll-out and Tim’s financial and industrial stability, safeguarding the workforce and the suppliers base;
    • KKR wants guarantees on the returns on its financial investment, therefore demands an aggressive financial policy that will undermine both Tim’s industrial ability and will condemn the Country to pay high price in the future when KRR will sell its investment to all taxpayers.
  • TIM loses its role of being the main engine to drive the digitalisation of the Country in the interest of all Italians. Without the direct control of the network, the Country will not be able to influence the digital agenda and drive the NRRP;
  • NetCo will become a private company, fully controlled by a private foreign investor with very high return targets in the short term and therefore will have almost no incentives to execute what our Country needs in the long-term including meeting NRRP targets, digitalisation of businesses and safeguarding the workforce and supplier base.

TVALUE’S PLAN
There is an alternative value creation path to relaunch TIM, in the interest of all the shareholders and our Country, without liquidating the network
We are in a pivotal moment in the history of TIM, a moment where critical business and capital allocation decisions are being made that will definitively impact the future of our company.

But in the case of TIM, this is not just about a company. It is about Italy, the progress of an entire Country and its ability to keep innovating and looking to the future with the eyes of a leader, while preserving its heritage.

TValue firmly believes that there is an alternative industrial path for TIM able to meet the country’s strategic needs and create value for all shareholders without the liquidation of the network that has been Italian for 100 years .

 

TValue has already officially shared with the board of directors (download letter) its plan whose guidelines are :

  1. Retain NetCo and the whole network in TIM. The Country needs and deserves to retain the control of the network – including Sparkle and FiberCop. The network is a strategic asset of TIM and acts as the Government key tool to ensure NRRP execution and digitalization of our Country;
  2. Create TechCo.TechCo, the new TIM, will be an Italian company with global ambitions effectively integrating the existing NetCo assets and EnterpriseCo competencies, knowhow, client relationships, supplier ecosystems and participates as Olivetti, Telsy, Noovle and related infrastructure as datacenters and PSN contracts. This reshaped TIM, focused on its unique infrastructure and offering exclusively non-regulated services, is referred to in our plan as TechCo to clearly highlight the new strategic vision of TIM in opposition to a simple NetCo disposal. TechCo will aim to become the partner of choice in supporting the Public Administration and Italian companies in their digital transformation. The retail business will be sold and TechCo will be focused just on the business and not regulated segments thus not competing in any consumer segment. In the regulated market TechCo will act as a pure wholesaler, covering all operators with a B2B approach thus eliminating most Antitrust issues. TechCo will also be the leading infrastructure player responsible for delivering nationwide fiber coverage plans and district coverage, as committed to in the NRRP, on time and on budget. TechCo, thanks to its clear strategic focus and positioning, will act as a market aggregator (moving to the role of predator rather than the one of potential prey) in the ICT, value-added, edge space allowing the Company to play a leading role also in Europe;
  3. National grid under the guidance of CDP without requesting Government for any fund. Establish national grid within TechCo with CDP as a key shareholder without any fund from the Government, but though the contribution in kind of OpenFiber, without its black areas, into TechCo, facilitating its increase of CDP’s stake in Telecom Italia. Macquarie and KKR would be encouraged to do the same, contributing in kind their respective stakes in OpenFiber, without the black areas, and FiberCop into Telecom Italia. OpenFiber’s black areas can be immediately marketed as they are attractive assets;
  4. Restructure, carve out and then sell TIMConsumer. TIMConsumer will be restructured, repositioning it as a digital customer platform and, once sustainable, it will be carved out and sold. Discussions with potential buyers will start immediately, with the objective of accelerating the process and reduce the debt burden as quickly as possible, but also to ensure that the restructuring process is aimed at creating the most palatable set of assets based on the desiderata of the potential buyers;
  5. Sell TIM Brasil.TIM’s Brazilian business, despite being a very valuable one, is not core. The sale of TIM Brasil, at the right price, will be an important tool to fund the transformation of the Company and the turnaround of TIMConsumer;
  6. TechCo (the new TIM) will remain a publicly traded company and be renamed Telecom Italia;

 

TValue’s plan has distinctive features

  • Solely focuses on the industrial content, aimed at increasing the value of the Company’s main assets rather than their liquidation, preserving competencies and allowing for a capital restructuring that creates the necessary conditions for debt sustainability in a natural way;
  • Ensures short-term objectives are met and continuity of infrastructure programs, including the NRRP, as well as long-term stability and capitalisation of TIM to serve Country’s digitalisation ambition and support the supply chains;
  • Is a market transaction, transparent to the market, executed on the market, and cannot in any case be referred to as a state aid;
  • Eliminates all the issues related to the definition of NetCo’s perimeter and the subsequent AGCOM analyses and evaluations;
  • Is not subject to any Antitrust or EU Commission on state aid scrutiny.

 

TValue’s plan is inclusive

  • This plan fosters better governance in TIM’s Board of Directors to properly engage all shareholders, starting from the main ones, Vivendi and CDP;
  • This plan welcomes to participate all existing stakeholders, including KKR, Macquarie and OpenFiber, and any future one that is willing to contribute to this opportunity in the interests of the company and our Country.

 

We believe this alternative plan is coherent and fully aligned with the needs of the Country and the Government’s requirements. It fully complies with the Government’s vision summarised in the MoU signed on 10 August 2023 and the subsequent decrees signed on 29 August 2023.

TVALUE CREATES VALUE FOR ALL
TValue firmly believes that there is an alternative future for TIM: the stock might reach €1 and might set the stage for the resumption of dividend payments to shareholders.
TValue had defined an alternative industrial plan capable of both addressing the strategic needs of our Country and deliver superior value by enhancing free cash flows generation to solve the debt issue without the liquidation of the network that has been in the hands of Italians for 100 years.

TValue has already officially shared with the board of directors (download letter) its proposal.

TValue did not have access to any confidential information, therefore our plan is exclusively based on an outside-in deep analysis of market dynamics and public data, including TIM’s disappointing half-year results announced on 2 August 2023.

TValue believes an effective, competent management team that we have already identified, in the span of 24 months, through a set of readily executable initiatives, can extract value for additional ca €1bn EBITDA and ca €600mm in cashflow generation as well as repay down debt by selling the retail part of TIM’s TimConsumer and TIM Brasil.

This flawless execution plan might move TIM stock price beyond €1 per share in the next 24 months and might lay the groundwork for the resumption of dividend payments to its shareholders.

This alternative plan and its opportunity to deliver superior value are in the interest of the country and not just for TValue.

TValue believes it can activate and execute this plan, but the first step is to foster better governance in TIM’s Board of Directors to take care of all shareholders, starting from the Company’s main shareholders, Vivendi and CDP.

The TValue plan welcomes, encourages and promotes the participation of all existing stakeholders, including KKR, Macquarie and OpenFiber, and all future ones that have already examined the dossier or are willing to examine it in the interest of the Company and the Country.

RIGHT GOVERNANCE
TIM, its shareholders, its employees, its suppliers and the whole Country can't wait anymore
TValue has already shared its plan with the Board of Directors.

The alternative proposed by TValue is actionable, has a clear timeline, a clear scope, a clear industrial and technological perimeter, preserves network integrity, avoids breakdowns and is designed to ensure the ambitious targets of the NRRP and pave the way for the establishment of a national grid. under the control of CDP thereby maintaining ownership firmly in the hands of the Government that represents all Italians.

The Execution of this plan requires proper leadership and TValue has in Stefano Siragusa the candidate that can operationally execute this plan. He has the right background, skills and motivation to effectively drive the Company through it.

For this reason, TValue has requested the Board of Directors of TIM to remove Pietro Labriola from the role of CEO and take all appropriate steps to co-opt Stefano Siragusa to the Board and appoint him as CEO to lead the company through the execution of this plan.

In the event of no action taken by the Board, TValue will assess the economic and market conditions to increase the stake it currently owns and represents up to slightly above 5% subject to the prior government authorisation according to the Golden Power rules. Immediately afterwards, a request to convene a shareholders’ meeting to be held as soon as possible would be sent to this board. During this meeting, or any other meeting if appropriate, TValue will ask all shareholders to remove Mr. Labriola and appoint Mr. Siragusa as new director, proposing to grant him the same powers.

PROMOTERS
Alessandro Barnaba
Founding Partner
Merlyn Advisors Ltd
Stefano Siragusa
Founding Partner
RN Capital Partners
CONTACTS
Press Office
press@tvalue.cloud