Italy's Enel approves Open Fiber sale to state investor CDP, Macquarie

By Stephen Jewkes, Elvira Pollina and Giuseppe Fonte

MILAN (Reuters) -Italian utility Enel on Friday agreed to sell its holding in Open Fiber, handing control of the broadband network firm to state lender Cassa Depositi e Prestiti (CDP) and bringing in Australian fund Macquarie as owner of a 40% stake.

State-controlled Enel and CDP had until now shared ownership of Open Fiber, which had been set up to roll out fibre optic cables to close Italy's digital divide with the rest of Europe.

By buying an additional 10% from Enel, CDP raises its Open Fiber stake to 60%, in a move seen as potentially easing a long-mooted plan to merge Open Fiber's network with that of phone group Telecom Italia (TIM).

Shares in the former phone monopoly rose 3.9% on Friday, the biggest gainer on Italy's blue-chip index, as investors bet the single network plan may gain traction after years of little progress.

CDP is the second-biggest shareholder in TIM, behind French media company Vivendi.

CDP will pay 530 million euros for 10% of Open Fiber, a price Enel said had been set based on the 2.65 billion euros ($3.20 billion) that Macquarie Infrastructure & Real Assets had originally offered for Enel's entire 50% holding in the fibre optic firm.

The deal with CDP is expected to close by the end of November, subject to the simultaneous sale of the remaining 40% of Open Fiber to Macquarie on the same terms.

The price, for both CDP and Macquarie, includes transferring a shareholders' loan that Enel granted to Open Fiber. Under the accords with both Macquarie and CDP, Enel is also entitled to an earn-out if Open Fiber wins a pending lawsuit against Telecom Italia.

Enel said the sale of its stake in Open Fiber entailed an injection of 194 million euros into the company, of which Enel would contribute 97 million.

In announcing its offer earlier on Friday, CDP had said it was committed to bringing in "new resources" before the closing of the deal to help speed up broadband network development.

The single network plan, which would avoid duplicating investments in fibre rollout, had been a priority of the previous government of Prime Minister Giuseppe Conte.

However, some ministers of the new government led by Mario Draghi have cast doubts on the plan due to regulatory issues, saying alternative options are also being considered.

Earlier on Friday, Open Fiber said it had given the required go ahead to the entrance of Macquarie in its capital.

CDP said it had approved a binding term sheet with Macquarie outlining governance of Open Fiber ahead of the fund becoming a shareholder in the fibre-optic business.

($1 = 0.8278 euros)

(Additional reporting and writing by Valentina Za; editing by Simon Cameron-Moore, Kirsten Donovan and Cynthia Osterman)