Bloomberg KKR Co. is considering a bid for Telecom Italia SpA's multi-billion euro network under the condition that the Italian government agrees to be a partner in the deal, as Rome tries to set up a state-controlled ultra-broadband grid to boost digital services, people familiar with the matter said.
Talks are underway between the US investment firm and Italian officials about a possible offer for the ex-phone monopolist's network, but only as part of a joint venture with a state-backed company or if a new state-owned financial vehicle is set up, said the people, who asked not to be named. Telecom Italia's shares gained as much as 4.6% in Milan on Friday after Bloomberg reported the possible bid.
KKR already owns a minority stake in Telecom Italia's FiberCop fiber unit, valued at €2 billion $2.1 billion. KKR last year made a preliminary €10.8 billion bid for the whole of the former Italian phone monopoly, though that offer was rejected.
Representatives for KKR, the Italian government and Telecom Italia didn't want to make a statement.
Italian officials are looking at options for Telecom Italia as Prime Minister Giorgia Meloni tries to set a policy for shoring up the debt-ridden phone carrier.
The goal is to retain control of the network after disposals and use the cash raised to reduce the company's debt, which last quarter was about €33 billion in gross terms, according to Bloomberg figures.
Telecom Italia Chief Executive Officer Pietro Labriola, who was appointed less than a year ago, is focused on extracting value by separating the company's infrastructure unit from its commercial business and selling assets to cut debt.
Over the last two years, a merger with the smaller, state-backed Open Fiber SpA was weighed by the company, aimed at avoiding duplication of investments. That plan was spearheaded by state lender Cassa Depositi e Prestiti SpA last month, which put on hold a non-binding offer for Telecom Italia s grid. Cassa Depositi owns about 10% of Telecom Italia and controls Open Fiber.
The merger project with Open Fiber is now temporarily on hold, though it can be revived and carried out later as a result, the people said.
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