Italian tower buyout comes with sky-high stakes

KKR & Co

13/10/2026 11:37

The author is a Reuters Breakingviews columnist.  The opinions expressed are her own.
By Jennifer Johnson
LONDON, Oct 13 (Reuters Breakingviews) - Some disagreements are best resolved behind closed doors and far away from public view. Top shareholders in Infrastrutture Wireless Italiane INWT.MI seem to think a dispute with key tenants of the $7 billion operator of mobile phone masts is one of these. Ardian and Oak Holdings 1 are lining up financing for a possible offer to buy the 29% of the Italian company they don't already own, Reuters reported on Sunday, citing two people close to the matter. A roughly 30% drop in INWIT's share price over the past 12 months makes a deal cheaper – but it's only a bargain if the dispute can be resolved smoothly.
Tower operators appeal to infrastructure investors because they have predictable cash flows, underpinned by long-term contracts with mobile phone carriers. The INWIT dispute has shaken that assumption. Swisscom-owned Fastweb and Telecom Italia TLIT.MI generated 88% of INWIT's revenue in 2025, and both argue that they can end their longstanding master service agreements (MSA) contracts with INWIT as early as 2028. The tower group maintains that their MSAs have been validly extended until 2038. The case is currently in the Italian courts.
While INWIT’s share price has dropped sharply, it is not factoring in the loss of the company's two largest customers. A more likely outcome is that the two sides renegotiate the MSAs at a lower price. French buyout shop Ardian owns 32% of the tower operator, while Oak Holdings 1 – an investment vehicle co-owned by KKR KKR.N, Vodafone VOD.L and BlackRock’s BLK.N GIP – has 39%.
As the pair already control the company, any premium is likely to be limited. Assume they offer €7.73 per share, roughly 10% above INWIT's closing price last Friday, and the outlay would be about €2 billion. Even then, potential returns don't look stellar. Analysts polled by VisibleAlpha reckon INWIT will pay out a €530 million dividend in 2031. Buying an extra 29% would allow Ardian and Oak Holdings 1 to share an additional payout worth €155 million. That's a modest 7.6% return on their outlay. 
Another option is to add leverage. Assume the buyers load another €1.3 billion of debt onto INWIT, reducing their investment to €700 million. This would lift the company's net debt to 7 times expected EBITDA for this year – above management’s target leverage range of 5 to 6 times. But after paying interest on the extra debt, the owners' incremental dividend would be just €63 million, according to Breakingviews calculations, which assume borrowing costs of 7%. That's a return of less than 10%, well below the payout that buyout shops typically look for. What's more, this calculation does not factor in any hit from renegotiating contracts. Any takeover offer is therefore a bet on a clean resolution to the dispute.
     
Follow Jennifer Johnson on Bluesky and LinkedIn.
     
CONTEXT NEWS
INWIT’s leading shareholders are arranging financing for a potential take-private deal, Reuters reported on October 11 citing two people close to the matter.
French private equity group Ardian and investment vehicle Oak Holdings 1 – backed by co-investors GIP, KKR and Vodafone – are exploring ​a bid to buy out minority shareholders in INWIT, the people said.
One person familiar with the matter told Reuters that Abu Dhabi investment firm Mubadala could take a stake in INWIT as part of the plan. The group’s shares were trading at €7.24 as of 1045 GMT on October 13 – an improvement of more than 3% from their closing price of just over €7 on October 9.

(Editing by Peter Thal Larsen; Production by Streisand Neto)
((For previous columns by the author, Reuters customers can click on JOHNSON/Jennifer.Johnson@thomsonreuters.com))