A group of banks in Italy is set to provide Telecom Italia unit INWIT a loan of up to 2.5 billion euros ($2.8 billion) for helping the unit merging its towers with those of Vodafone, Reuters reported citing two sources.
Telecom Italia (TIM) is the holds 60% share in INWIT and in February it came to an agreement with Vodafone to experiment the idea of merging their 22,000 telecom poles in Italy into a single unit.
The banks which are concluding the bridge-to-bond loan includes Mediobanca, UniCredit, Intesa Sanpaolo, BofA-Merrill Lynch and Goldman Sachs but other banks could possibly join the deal later on, the sources said.
A bridge-to-bond loan is an offer of financing a project banks usually made to the companies before their turning to the capital market to generate additional funds for that project.
On Saturday, Italian daily Il Messaggero broke the news of a five-year loan is in process to help the two companies in their partnership.
The loaning offer was expected to be concluded at the least by the end of July, with TIM and Vodafone, early in August, are expected to finalize merger of their masts, the sources said.
As the two telecom groups are in requirement of accelerating their roll-out of fifth-generation (5G) mobile phone services across the country at a lower cost, the sources said that the new funding would partly be used by INWIT to expand its business.
In order to grab the expensive 5G licenses, both companies came on stretching their balance sheets earlier this year to become able to cover the heavy expenses.
The merger for folding Vodafone’s Italian towers into INWIT will give the Italian and British companies an equal shareholdings and rights of governance in the INWIT and without having a need of launching a tender offer by either of them on INWIT’s remaing shares.