Summary Bullets:
• Telecom Italia has divested Sparkle, its international infrastructure and services unit, in an EUR700 million ($733 million) deal as the carrier looks to reduce debt and focus on its core business.
• Italy’s Ministry of Economy and Finance (MEF) will have majority control of the business with 70% of the company, with the remaining 30% share owned by Retelit, a subsidiary of Spanish infrastructure fund Asterion.
Telecom Italia has finally offloaded its international infrastructure and services unit Sparkle to the Italian MEF in an EUR700 million ($733 million) partnership deal with Retelit, a fiber-optic operator controlled by Spanish Infrastructure fund Asterion. Sparkle operates more than 600,000 km of cables that connect countries across Europe and the Americas. Telecom Italia’s board unanimously approved the deal, which was first put forward as a non-binding offer in October 2024 but was rejected by the board. The sale is expected to be completed within Q1 2026, subject to regulatory approvals.
The disposal of its international infrastructure and services unit is the last step in the company’s strategy to divest its fixed network infrastructure. In October 2023, the telecom operator divested its domestic fixed-line assets business “NetCo” to US investment firm, KKR, in a deal worth EUR18.8 billion ($20.15 billion), which enabled the company to concentrate on the domestic market while focusing on emerging technologies, including 5G and digital solutions, while improving its financial position to reduce overall debt.
The Italian government, led by Prime Minister Giorgia Meloni, understands the importance of Sparkle and its role in transmitting sensitive data across the Mediterranean and to the Americas, and it seeks to bring the network under state ownership as part of the government’s plan to take control of more strategic assets. Telecom Italia has established multiple domestic partnerships with domestic companies to help protect its subsea infrastructure. In December 2024, the carrier formed a strategic partnership with Italian shipbuilding company Fincantieri, signing a memorandum of understanding (MoU) to develop technological solutions for the surveillance and protection of submarine telecommunications cables and working with the Italian Navy since 2022 to protect its fiber-optic network.
In a growing trend, governments are understanding the importance of digital infrastructure and how it can impact on not only global communications but also economic growth and national security. This has led to governments becoming more involved, not only through regulation but also through other arrangements including financial investments, strategic partnerships, and security and defense initiatives. While the Sparkle deal isn’t the first acquisition by a government, in a similar move in June 2024, the French government acquired an 80% stake in Alcatel Submarine Networks (ASN) from Finnish telecoms giant Nokia. Nokia will still retain a 20% share in the company with board representation to ensure a smooth transition until a targeted exit date is agreed in which the French government will acquire Nokia’s remaining interest. ASN was part of French networking company Alcatel-Lucent Enterprise, which was acquired in 2015 by Nokia for $16.6 billion, and is a supplier of cables in French territories in the Caribbean. Governments are expected to play a greater role in ensuring the networks remain secure and resilient as well as safeguard the national interests of critical infrastructure.