TIM Investor Merlyn’s Blueprint: Debt Reduction, $7 Billion Cash Reserves
Merlyn Partners, an activist investor holding a 0.5% stake in Telecom Italia (TIM), has outlined several scenarios ahead of an upcoming shareholder vote on April 23 to appoint new top executives at TIM. One notable scenario involves TIM selling its Brazilian unit and its domestic consumer business, which, according to Merlyn’s calculations, would leave TIM with 6.6 billion euros ($7 billion) in cash after repaying all debts.
Four out of the six scenarios presented by Merlyn are based on the proposed sale of TIM’s domestic access network to KKR, a deal worth up to 22 billion euros advocated by TIM CEO Pietro Labriola. Merlyn also explored the option of retaining the fixed-line network while divesting the domestic consumer business and Brazilian phone carrier TIM SA.
Merlyn argues that its plan offers an alternative path for TIM, emphasizing the need for deleveraging and focusing on providing high-value connectivity and digital services to corporate and public administration clients. They propose immediate divestment from non-core operations like TIM Brasil in 2024 and businesses lacking competitive advantages like TIM Consumer by mid-2025.
Another activist investor, Bluebell Capital Partners, has proposed its own slate of candidates for TIM’s board of directors and an alternative strategy. Both Merlyn and Bluebell seek support from TIM’s top investor, Vivendi, which has challenged the network sale in courts and raised concerns about the sustainability of the remaining business.
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