Retelit and the MEF Signed Agreement with TIM to Acquire Sparkle for €700million

Retelit and the Ministry of Economy and Finance (MEF), united under the vehicle Boost BidCo, have finalized agreement with TIM for the acquisition of Sparkle for €700million.

Retelit S.p.A. is an Italian telecommunications and infrastructure provider specialized in fiber networks, cloud solutions, and cybersecurity. Since December 2021, Retelit has become a 100% owned subsidiary of Asterion Industrial Partners, a Madrid-headquartered private equity firm focused on mid-market infrastructure investments, with a portfolio of telecommunications assets across Europe. Retelit is a member of AAE-1 subsea cable consortium.

The MEF is a central institution responsible for Italy’s fiscal policy, public investment, and economic growth initiatives. One of the main focuses of the MEF in recent years is the protection of Italian assets considered to be strategic for national security and economic sovereignty and strengthening the position of critical industries, such as telecommunications, in the global arena.

As of December, 2024, Asterion’s investment committee, the owner of Retelit, has given the green light to acquire Sparkle, in a partnership with the MEF which will control a 70% stake in Sparkle, with the remaining 30% retained by Retelit.

Sparkle S.p.A. (formerly Telecom Italia Sparkle S.p.A.) is an international telecommunications service provider and a wholly owned subsidiary of TIM SpA (formerly Telecom Italia SpA).

Sparkle operates various subsea cable assets and a global Tier 1 IP nework, made up of a proprietary system with nearly 600,000 kilometers of fiber optics, terrestrial and submarine cable systems, data centers, and landing stations. The network also boasts over 1,200 Points of Presence, or access points, from which users can reach the network and provide far-reaching connectivity around the world.

Sparkle’s total revenues for 2023 were €1.02 billion, representing a 3% growth compared to the previous year. Sparkle’s EBITDA margin showed relative stability between 2019 and 2023, around the 12% level. In 2023, even though the company reported an EBITDA of €121.5 million, it still had a negative EBIT of €9.3 million, mainly due to high depreciation and amortization (D&A) expenses of €130.9 million. 

Sparkle consistently reported a net loss from 2019 to 2023, ultimately amounting to €42.4 million in 2023, largely attributed to a rise in Sparkle’s interest expenses.

The final transaction between Boost BidCo and TIM sets Sparkle’s enterprise value at 700 million euros. The purchase price will be equal to the enterprise value, adjusted for Sparkle’s net debt and working capital at closing. The agreement also provides for a potential price adjustment if certain 2025 EBITDA targets for Sparkle are not met.
The transaction is expected to be finalized by the fourth quarter of 2025, once all preparatory steps have been completed, including the required Antitrust and Golden Power authorizations.

It is hard to believe that Sparkle was sold at an pretty low EV/EBITDA ratio of 5.76, based on its EBITDA in 2023.

Similar with the Sparkle sales, in October 2020, Telia Carrier was acquired for €900 million by Polhem Infra, an infrastructure investor owned by Swedish pension funds, at an EV/EBITDA ratio of 18.9. At that time, Telia Carrier was ranked as the Top 1 global Internet backbone networks in the world, with its network across Europe, North America, and Asia, connecting customers in more than 120 countries. Both Telia Carrier and Sparkle operates leading Internet backbone networks in the world.