Banks readying 2.5 billion euro loan in TIM-Vodafone Italy tower deal - sources

MILAN (Reuters) - A group of banks is set to lend Telecom Italia unit INWIT <INWT.MI> up to 2.5 billion euros (£2.2 billion) to help it merge its towers with those of Vodafone, two sources said.

Telecom Italia (TIM) <TLIT.MI>, which controls 60% of INWIT, agreed with Vodafone <VOD.L> in February to study the idea of combining their 22,000 telecom masts in Italy in a single unit.

UniCredit <CRDI.MI>, Intesa Sanpaolo <ISP.MI>, Mediobanca <MDBI.MI>, Goldman Sachs <GS.N> and BofA-Merrill Lynch <BAC.N> are among the banks finalising the bridge-to-bond loan but other lenders could join the deal, the sources said.

A bridge-to-bond loan is a facility provided by banks to companies before they can access the capital market.

Italian daily Il Messaggero reported on Saturday that a five-year loan is being worked out to support the partnership between TIM and Vodafone.

The financing scheme was expected to be wrapped up by the end of July at the latest, the sources said, with the two telephone groups expected to sign off on a merger of their towers early in August.

The sources said INWIT would partly use the new funding to develop its business as Telecom Italia and Vodafone look to speed up the roll out across Italy of fifth-generation mobile phone services at a lower cost.

Both companies stretched their balance sheets earlier this year to buy expensive licences for 5G mobile waves.

Folding Vodafone's Italian towers into INWIT is part of a three-year strategy plan ironed out earlier this year by TIM CEO Luigi Gubitosi aimed at reviving Italy's biggest phone group which is saddled with more than 25 billion euros of debt.

The merger will give TIM and Vodafone equal shareholdings and governance rights in INWIT and exclude any need for either to launch a tender offer on INWIT’s remaining shares.

Inwit did not respond to a request for a comment. TIM and Vodafone declined to comment.

(Reporting by Gianluca Semeraro and Elvira Pollina; Editing by Stephen Jewkes and Edmund Blair)