BT has agreed to sell a couple of Italian businesses to TIM via a deal of undisclosed value, but that is unlikely to be a big money-spinner for the UK incumbent.
Under the terms of the arrangement, TIM will take control of BT’s public administration unit, which serves local and national governments, and its SME operations. Together the businesses generated €90 million in revenues in the most recent financial year.
Despite the relatively small scale of the businesses – for context, BT’s Global unit, of which they are a part, generated close to £4.4 billion in turnover last year – they will be a valuable asset to TIM, providing a boost to its own business offerings.
“The planned transaction will enable TIM to expand its supply of communications and connectivity services, accelerating digitalisation of the public affairs at central, regional and local levels in the country,” the operators said in a joint statement. “With the planned integration of the SME business unit, TIM would further diversify the offer of secure and efficient ICT and cloud solutions for small and medium businesses.”
For its part, BT noted that the deal forms part of its ongoing transformation of the global services division, which has turned in lacklustre financial performances in recent years and was hit hard by an accounting scandal in Italy four years ago. Reports of a possible sale of BT Italia began to emerge almost immediately, so if anything, the big news with regard to the TIM announcement is that it was such a long time coming.
BT has not sold BT Italia in its entirety though, just to be clear. It is retaining a presence in Italy – a strong presence, it claims – to serve large enterprises and multinationals.
And that reflects its overall strategy for BT Global, which essentially is to focus on the ‘global’ bit. As such, the telco has sold off smaller business units in as many as 20 markets in recent times, including offloading its French domestic business to Computacenter, a deal that closed last month.
The Italy sale is “a symbolic moment” for BT’s global operations, said BT Global chief executive Bas Burger in a separate statement on Thursday. “It draws a line under its first wave of transformation and plans to pivot to growth — in a sector where growth has proved elusive,” Burger said.
“Finding the right moment to move into growth mode is more of an art than a science. It depends on as many external as internal factors — and knowing exactly when to press the button for growth is a tough call,” the CEO added. “Getting into good shape is just one step on the way. Growing in the right areas at the right speed and with the right focus is the next. It is a Goldilocks moment and that is where we are heading alongside our customers, our strategic partners and our teams around the world.”
So it seems BT is planning to return to growth at its Global business, but it is waiting until the time is right. Interesting strategy…