Board of Italy’s CDP meets Sunday over bid for Telecom Italia grid

By Elvira Pollina and Giuseppe Fonte

MILAN (Reuters) -Italian state investor CDP has called a board meeting on Sunday which is expected to approve a long-delayed non-binding offer for the fixed network of former phone monopoly Telecom Italia, three sources close to the matter said.

CDP has teamed up with Australian infrastructure fund Macquarie in the offer for Italy’s most important telecommunications infrastructure, which would compete with one submitted by U.S. investment firm KKR.

In recent weeks, sources have told Reuters that CDP and Macquarie were ready to value TIM’s grid at around 18 billion euros ($19 billion), including some 6 billion euros of debt.

The joint offer would comprise also Telecom Italia’s smaller rival Open Fiber, of which CDP and Macquarie are co-investors, according to the same sources.

KKR’s proposal, which values TIM’s grid at around 20 billion euros including debt and 2 billion euros earnout, has given fresh impetus to efforts to revamp ailing TIM after prolonged talks involving the government and TIM’s top two shareholders, CDP and France’s Vivendi, yielded no results.

Ceding control of the grid to cut a 25 billion euro debt pile and offload half of TIM’s 40,000 domestic staff is a key plank of CEO Pietro Labriola’s push to revive the group.

Prime Minister Giorgia Meloni has repeatedly said her government wants to win control of TIM’s network infrastructure while protecting jobs, but within her administration there is no common ground on how to reach such a goal.

An offer from CDP and Macquarie leaves several scenarios open, two government officials said, without elaborating.

Vivendi, whose support is needed for any deal to go through, has set a 31 billion euro price tag on TIM’s most valuable asset.

TIM has already said KKR’s proposal “does not fully reflect” the value of its asset and said it would seek an improved offer by the end of this month.

In its non-binding offer for a controlling stake in TIM’s grid, KKR has left the door open to involving a state-run entity as a minority shareholder, but it opposes CDP playing such as role due to antitrust issues, the sources said.

Meloni’s predecessors, Mario Draghi and Giuseppe Conte, have both backed plans to combine TIM’s and Open Fiber’s grids but valuations and regulation issues thwarted efforts.

($1 = 0.9406 euros)

(Reporting by Elvira Pollina and Giuseppe Fonte; Writing by Valentina Za; Editing by Mark Heinrich, David Holmes and Louise Heavens)