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Italy weighs options for Telecom Italia grid after KKR bid

Italian state lender Cassa Depositi e Prestiti still needs to secure government backing for a counter-offer to U.S. private equity firm KKR’s approach to buy Telecom Italia’s network, sources told Reuters.

CDP is working to finalise its offer before Feb. 24, when TIM’s board will convene to decide on KKR’s non-binding proposal to buy a controlling stake in the phone group’s landline infrastructure, two sources close to the matter said.

While Prime Minister Giorgia Meloni has repeatedly said her government wants public control of TIM’s network, there is no common ground yet within it on how to achieve this.

One of the sources said Economy Minister Giancarlo Giorgetti was weighing “multiple options” to put TIM’s grid under strategic government control, and the acquisition of a controlling stake through state-run firms was not the only one.

Giorgetti has not yet met CDP Chief Executive Dario Scannapieco to give his backing to a counter-offer, the source added.

Il Messaggero newspaper on Wednesday reported that CDP and Australian fund Macquarie were preparing a bid for TIM’s (TIM) network worth about 20 billion euros ($21.5 billion).

The proposal by KKR, which is already an investor in TIM’s network, is also worth around 20 billion euros, sources have previously said.

KKR’s approach has injected impetus into efforts to reshape the debt-laden former phone monopoly after talks involving the Italian government, CDP and top TIM shareholder Vivendi (VIV.PA) got bogged down.

The government plays a key role as it considers TIM’s network a strategic asset. Rome would also like to see faster broadband available to more Italian households and businesses.

Il Messaggero said CDP would put in 60% of the offer and Macquarie the remaining 40%.

On Tuesday, sources told Reuters that CDP was sounding out potential additional investors to join a bid for TIM’s grid assets, but one of the sources indicated that CDP was likely to end up presenting a bid with Macquarie only as co-investor.

CDP is the second-largest shareholder in TIM and controls a 60% stake in Open Fiber, which has a rival fibre optic network infrastructure that would be combined with TIM’s assets.

Macquarie already has a 40% stake in Open Fiber and has been involved for months in a plan to combine the two networks.

Carving out and ceding control of TIM’s prized landline is a focal point of CEO Pietro Labriola’s strategy to cut TIM’s 25.5 billion euro debt pile and fund much-needed investments to upgrade its infrastructure from copper to fibre. Reuters

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