Telecom Italia (TIM) General Manager Pietro Labriola poses for a portrait next to the company's name at TIM headquarters in Rome, Italy, January 17, 2022.
Telecom Italia (TIM) General Manager Pietro Labriola poses for a portrait next to the company's name at TIM headquarters in Rome, Italy, January 17, 2022. Reuters / GUGLIELMO MANGIAPANE

The new boss of Telecom Italia set out the virtues of his standalone plan as an alternative to a takeover approach from KKR but shares in the company plunged on Thursday after a record loss and a gloomy forecast for this year.

TIM CEO Pietro Labriola said the 10.8 billion euro ($12 billion) KKR approach was hedged with a whole series of uncertainties but appeared to be similar to his proposal to split Italy's leading telecoms company into separate network and service businesses.

Financial results published late on Wednesday showed the scale of the problems facing TIM.

The company plunged to a net loss of 8.7 billion euros in 2021 after a 4.1 billion euro impairment of domestic goodwill and a 3.8 billion euro write off of a tax benefit. It also suspended dividend payments.

In its new three-year plan, TIM said it expected EBITDA to be stable over the 2022-24 period as a whole after a low-teens decrease in 2022, marking it out as another tough year.

TIM shares slid 10% to around 0.31 euros by 0930 GMT, well below the 0.505 price at which the KKR approach was pitched when it was announced in November.

"We think that the size of FY21 losses leading to no dividends as well as the cautious 2022-24 targets came as a surprise," Intesa Sanpaolo analysts wrote in a research note.

VALUE CREATION

Leading TIM shareholder Vivendi believes the KKR offer is too low and Labriola said his plan to split the network business from other activities such as consumer and its Brazilian operation would help to unlock value.

"Once KKR expresses interest at that price, you realise that the real value of the company is higher," said Labriola, a former head of the Brazilian operation, told reporters.

"If we do it internally the value generated can probably be redistributed among all shareholders, majority and minority."

The former phone monopoly said late on Wednesday that an assessment by its advisers on KKR's approach would be finalised shortly and the board would then decide on it.

KKR is already involved in TIM after paying 1.8 billion euros last year for a 37.5% stake in its secondary network, known as FiberCop.

There has been speculation that KKR could ditch its approach and settle for a strengthened role in the new TIM network business but Labriola said there had been no talks on that with the U.S. fund.

($1 = 0.9009 euros)