KKR to tap Italy’s railway chief to run $20 billion telecom grid

KKR & Co. is set to tap an Italian industry veteran to run the telecom network business which is buying from Telecom Italia SpA, according to people familiar with the matter said. 

Luigi Ferraris, who is currently head of state-controlled rail company Ferrovie dello Stato SpA, could be appointed at the €19 billion ($20.3 billion) network company as soon as this summer, a decision backed by Italy’s government, said the people, asking not to be named as the plan isn’t public.

The decision is part of a slew of corporate appointments at top companies that fall under Giorgia Meloni’s government oversight and follows a landmark agreement between Telecom Italia, KKR and the government to spin off the company’s most valuable asset in a bid to cut debt.

A spokesperson for KKR and for the Italian government declined to comment. No final decision on the appointments has been made, the people said.

Stefano Donnarumma, former CEO at electricity grid operator Terna SpA, would replace Ferraris at Ferrovie as part of the reshuffle, the people said. Ferraris himself was Terna’s CEO from 2017 to 2020. 

The newly separated network company will focus on wholesale services, with a possible future goal of gaining a solid revenue stream from regulated tariffs. 

The new firm would also be the first case in Europe in which a hub for fiber network infrastructure and technologies would be available to the whole market while also having a widespread presence throughout the country.

Telecom Italia agreed last year to sell its landline network to KKR for about €19 billion ($20.3 billion) plus earn-outs, and the transaction is expected to be completed by the end of this summer, with approval by European authorities still pending.

Italy will retain a minority stake in the network business due to its status as a strategic asset. State lender Cassa Depositi e Prestiti SpA already owns almost 10% of Telecom Italia.

--With assistance from Donato Paolo Mancini.