Telecom Italia SpA has rejected Italy's bid of up to €750 million ($805 million) for its submarine cable unit, Telecom Italia Sparkle SpA. The refusal has further extended the sale process of a crucial asset for the Italian government.
In a statement released on Wednesday, Telecom Italia stated that it found the government's offer "unsatisfactory." The bid was made by Prime Minister Giorgia Meloni's government, which considers the acquisition of Telecom Italia Sparkle to be of strategic importance for the country. However, both parties have failed to reach an agreement on the price thus far.
Telecom Italia Sparkle operates an extensive network of over 600,000 kilometers (373,000 miles) of submarine cables, connecting various countries including Israel and the US. These subsea cables play a substantial role in facilitating global data flow, potentially encompassing sensitive information, across continents.
As part of its strategic plan, Telecom Italia had already sold its landline network to KKR & Co. in a monumental €22 billion ($23.8 billion) deal. However, the Sparkle unit was intentionally excluded from this transaction due to its geopolitical significance.
This marks the second time the board of Telecom Italia has rejected an offer for the submarine cable unit. Following the rejection, CEO Pietro Labriola has been instructed by the board to negotiate an alternative option, potentially involving modifications to the contractual terms. The assumption is that Telecom Italia will maintain a stake in Sparkle for a certain period and actively support the implementation of the strategic plan.
The sale of Telecom Italia Sparkle is a key focus for the Italian government as it seeks to retain control over this critical infrastructure. The delay caused by the rejection of the government's offer indicates the potential challenges in aligning the interests of both parties regarding the valuation of the asset. Future negotiations will be crucial in determining a suitable agreement that satisfies both Telecom Italia and the Italian government's objectives.