KKR is grappling with a projected €449m earnings shortfall at FiberCop, the Italian telecom network business it acquired from Telecom Italia last year in a landmark €22bn carve-out deal, according to a report by the Financial Times.
The unexpected gap in EBITDA forecasts, presented by FiberCop’s management last month, has forced KKR to tighten its grip on the company, raising concerns among co-investors, including the Abu Dhabi Investment Authority (ADIA), CPP Investments, and the Italian Treasury. The turmoil underscores the challenges the US private equity giant faces in executing Europe’s largest-ever PE-led telecom deal.
The management crisis at FiberCop escalated after CEO Luigi Ferraris abruptly resigned, just months into his tenure. His departure followed a tense board meeting where KKR was confronted with significantly lower-than-expected financial projections.
To regain control, KKR has imposed stricter oversight on FiberCop’s decision-making. According to an internal memo, all major operational decisions now require prior written approval from one of two executives selected by KKR, including a London-based KKR executive set to join FiberCop this month.
At a 16 January investor meeting, FiberCop’s CFO disclosed that 2025 EBITDA would be €449m lower than initially forecasted in KKR’s original business plan. The cumulative five-year EBITDA shortfall is now estimated at €2bn, potentially jeopardising billions in planned dividend distributions to shareholders.
ADIA’s Head of Digital Infrastructure, Mamoun Jamai, reportedly reacted with disbelief, questioning how the numbers could be off by 20% just months after extensive due diligence.
The shortfall has put FiberCop in a precarious financial position, forcing the company to either cut dividends or seek additional public debt financing, which could lead to a credit rating downgrade. In response, FiberCop has put cost-saving measures in place, including: delaying an expensive early retirement program; deferring other costs to 2026 and beyond; and revising projections for customer line losses.
A revised 2025 budget is expected by the end of the month, though a broader business plan update won’t be finalised until summer.
The financial struggles at FiberCop stem from multiple factors, including: slower-than-expected adoption of fibre broadband; declining connectivity revenues; higher labour and IT costs; and the abrupt cancellation of a €100m contract with Telecom Italia.
Italy’s highly regulated telecom sector and complex geographic challenges have also made fibre network rollouts more difficult than anticipated. Many consumers are switching from copper lines to non-fibre alternatives or choosing other fibre providers, further impacting FiberCop’s revenue projections.
