What TIM’s mega-spin-off reveals about Europe’s telecoms industry

EVEN BY ITALY’STIM TIMTIMTIM TIM chaotic standards, Group, the country’s largest provider of telecommunication services, is an odd beast. In the past seven years it has churned through five chief executives. It has amassed net debt of more than €25bn ($27bn), making it the most indebted of Europe’s large telecoms firms. And now, to lower the load, it wants to do what none of its peers has done, by selling off its main asset: the fixed network. When Pietro Labriola, ’s latest new boss, explains the spin-off, he does not beat around the bush. With interest rates rising, the debt burden is becoming crushing. All three big ratings agencies now score ’s debt as below investment grade. Selling off the fixed network, which is expected to fetch more than €20bn, is “the clearest way to regain industrial options”. Offers were due to be in by June 9th.is an extreme case. Yet its move reveals a lot about where Europe’s hyperfragmented telecoms industry is headed. America and China have less than a handful of operators; Europe has more than 100. Though some are local subsidiaries of larger companies, they still compete in a patchwork of national markets. If more European operators follow ’s example and split their fixed networks from their other assets, as seems likely, this “delayering” may, ironically, be the first step towards consolidation.