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Italy's TIM looks for $21 billion valuation for its grid in single network deal-sources

·2-min read
FILE PHOTO: The logo of Telecom Italia is seen at group headquarters in Rome, Italy

(This May 31 story refiles to fix headline)

By Elvira Pollina and Gianluca Semeraro

MILAN (Reuters) - Telecom Italia (TIM) has put a price tag of about 20 billion euros ($21.5 billion) including debt on the landline grid which the former phone monopoly could sell as part of plan to create a unified national fibre company, two sources with knowledge of the matter said on Tuesday.

The plan, sketched out in a preliminary agreement on Sunday, aims to combine TIM's fixed network with that of broadband rival Open Fiber to create a national network champion under state control.

Under pressure for years in its hyper-competitive domestic market, TIM is looking to raise cash by hiving off its landline network to cut its debt pile and focus on its service operations.

One of the sources said the 20 billion euro valuation does not include synergies which would be created from a combination with Open Fiber, which is 60% owned by state lender CDP.

A second source said it had not yet been decided how much debt would be included in any transaction. As of March 31, TIM's net debt was 23 billion euros.

TIM declined to comment.

Italy is keen to create a single broadband network champion to avoid duplicating investments across the country and to speed up a fibre optic roll-out across the country's far-flung regions.

CDP, which also has a stake in TIM, is set to hold a 70-77% stake of the combined broadband network, daily Il Messaggero reported on Tuesday, effectively putting the state back in charge of the country's main telecoms infrastructure.

According to Il Messaggero, infrastructure funds Macquarie and KKR will hold 12-15% and 10-13% of the entity, respectively, while Swisscom's unit Fastweb will get a 1-1.5% stake.

The preliminary agreement was also signed by Macquarie and KKR, which hold minority stakes, respectively, in Open Fiber and in TIM's last-mile network business.

There was no comment from any of the other parties mentioned in the report. Parties aim to finalise a binding agreement by the end of October.

Shares in TIM rose as much as 5%, boosted by signs of progress on reshaping the group.

($1 = 0.9302 euros)

(Reporting by Cristina Carlevaro and Elvira Pollina; Writing by Keith Weir; Editing by Jane Merriman and David Holmes)

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