TIM and Vodafone sell stake in Italian mobile towers unit to cut debt

By Elvira Pollina

MILAN (Reuters) - Telecom Italia (TIM) and Vodafone have completed the sale of an 8.6% combined stake in Italy's biggest mobile towers company INWIT as part of efforts to cut debt, the companies said.

The placement of shares in the business in which Vodafone and TIM merged their mobile towers infrastructure was announced late on Wednesday, catching analysts by surprise after TIM's chief executive said last month the two groups had been in talks with funds over a planned sale of a 25% stake in INWIT.

Sources had said that a consortium led by French private equity group Ardian was poised to buy the stake.

The share placement came after talks with the consortium had stalled over valuation following the market turmoil caused by the coronavirus outbreak, two sources familiar with the matter said. A third source said the situation remained fluid.

With INWIT shares having rallied by 30% this year, market prices could may been more attractive than funds' valuations, said Domenico Ghilotti, an analyst at broker Equita.

TIM and Vodafone said they had each raised about 400 million euros ($433 million) by selling a 4.3% stake at 9.60 euros per share - nearly 11% below INWIT's closing price on Wednesday.

In their annual reports for 2019, TIM and Vodafone reported net debt of 28.2 billion euros and 27 billion euros respectively.

After the sale, which will lift INWIT's free float by more than a third, Vodafone and TIM will each hold 33.2% of the towers business, down from initial stakes of 37.5%, and keep joint control.

Vodafone and TIM said they had agreed to a 90-day lock-up period on their remaining shares, but added they could sell an additional stake during the lock-up period with the prior consent of the joint bookrunners.

BofA Securities, Banca IMI, Goldman Sachs International and UBS acted as joint global coordinators on the offer.

On Thursday, shares in INWIT ended down 8.6% at 9.80 euros Vodafone and TIM shares closed up 0.47% and 3.4% respectively.

($1 = 0.9240 euros)

(Reporting by Elvira Pollina; Additional reporting by Elisa Anzolin and Stephen Jewkes; Editing by David Goodman and Mark Potter)