After Fastweb + Vodafone last week, TIM is now also canceling the Master Service Agreement (MSA) with Inwit. In a note released on Sunday, the TIM Board of Directors decided to terminate the long-term contract that regulates the relationship between the parties for the use of the infrastructure (Inwit’s transmission towers), “with effect from the contractual expiry of August 2030, following the clause on the change of control exercised in 2022”. Inwit’s response was not lacking, reiterating that the MSA with TIM is valid until 2038 and the cancellation is “without legal basis”.
The date considered valid by TIM for the expiry of the MSA in place with Inwit is therefore August 2030, i.e. eight years after the events which, according to the telephone company, triggered the “change of control” clause, to which the cancellation of the contract is subject. For a similar reason, Fastweb + Vodafone, as communicated last week, considers that its contract will expire in March 2028.
For Inwit, which identified the change of control as having occurred in August 2022, the contract with TIM would be valid until August 2038. Same thing for the MSA with Fastweb + Vodafone.
TIM’s point of view
In its note yesterday, TIM specified that “in the event that it is ascertained – in court or by agreement between the parties – that the change of control which occurred in December 2020 determined the applicability of the relevant contractual clause”, the communication “must also be understood as a cancellation with effect from the original deadline of 31 March 2028”.
For the telecommunications company, the decision to cancel the MSA “is part of the process of optimizing the infrastructure cost structure started by the Company, consistent with the initiatives recently announced to the market, and is part of TIM’s ordinary operational and industrial options within the management of its infrastructural perimeter and its commercial relationships”.
Inwit’s reply
In its note, Inwit underlines that the “contract provides that, in the event of a change of control, each party has the right to automatically renew the MSA for a period of 8 years, renewable for a further 8 years (for a total of 16 years), without the party to whom the exercise of the option has been communicated being able to give notice”.
In August 2022, following the change of joint control that occurred over INWIT, “TIM exercised the option, with consequent automatic extension of the duration of the MSA for a period of 8+8 years”, and therefore until August 2038. At the same time, INWIT “promptly communicated to TIM the exercise of its option right, extending the MSA by 8+8 years” again starting from August 2022 and therefore until August 2038.
“As a result of the “cross” exercise of the right of option”, continues Inwit, “each party has sterilized the right of termination of the other, with the consequence that the duration of the MSA has been “irrevocably extended” for both parties, TIM and INWIT, for a further 8+8 years until August 2038.
According to Inwit, therefore, “to the disfavor of TIM it appears “ineffective and solely instrumental in exerting undue pressure on INWIT, aimed at renegotiating the economic terms of the MSA”.
Extremely competitive fees
According to Inwit, “even from an economic point of view”, TIM’s choice “proves to be completely unreasonable”. The fees applied, states in the note, “are extremely competitive and well below the European average, also due to the fact that the fee envisaged by the MSA includes exclusive rights to reserve space and, in some cases, real veto rights with respect to the concession of hospitality for the benefit of third parties, which go beyond the contractual standards envisaged by the MSAs at an international level”.
According to Inwit, therefore the “duplication of infrastructure networks” is “lacking any industrial, economic and environmental reason and risks translating into an inefficient and unsustainable use of resources, without proportionate benefits in terms of coverage or quality of service”.
The next steps
TIM said that “it will start negotiations to agree with INWIT a multi-year migration plan that ensures operational continuity after the expiry of the contract”. The Group said it was “available to evaluate with INWIT an overall review of the economic and service conditions of the agreement” also with a view to “continuing the development of the country’s strategic infrastructure investments”.
For its part, Inwit confirmed its “willingness to evaluate improvements with respect to the current structure of the contract, in continuity with the original provisions of the MSA”.
