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Italy's TIM gears up to sell minority stake in enterprise service arm

·2-min read
The Tim logo is seen at its headquarters

By Elvira Pollina

MILAN (Reuters) -Telecom Italia (TIM) is close to kicking off a process to sell a minority stake in its enterprise service arm, two sources close to the matter said, as CEO Pietro Labriola strives to revamp Italy's biggest phone group.

Labriola's turnaround plan for the debt-laden former phone monopoly centres around ceding control of its prized landline grid to state lender CDP, while also breaking up the company into several units and luring new investors.

As it seeks to press ahead with its turnaround plan while valuation issues complicate the network's disposal, TIM will shortly launch a beauty contest to select a partner for the so-called TIM Enterprise business unit, the sources said.

The venture combines the phone group's connectivity services for big corporate clients and public administration, as well as cloud, cybersecurity and Internet of Things operations.

In March, CVC made a non-binding proposal for a stake of up to 49% in the unit. The approach valued the venture at 6 billion euros ($5.98 billion), including debt, a price tag deemed inadequate by TIM, sources had previously said.

Other players besides CVC have expressed interest after the unit was presented at a capital markets day in July, Labriola told analysts last month, adding TIM would try to "extract the maximum value from this area."

In the meantime, diverging views over the value of TIM's landline assets pitting TIM's top investor Vivendi against the group's second biggest investor CDP are complicating talks over the network disposal ahead of a national election on Sept. 25.

Vivendi has warned it would not back a sale of TIM's fixed network infrastructure for less than 31 billion euros, a valuation criticised by CDP, other sources have said.

The state lender is keen to create a single national network operator merging TIM's network assets with those of rival Open Fiber.

Vivendi, which owns a 24% stake of TIM and whose support is key for any deal, is ramping up pressures ahead of a board meeting on Sept. 29.

The French group has sent two letters to TIM's board to complain over a potential conflict of interest and CDP governance issues, the same sources added.

Uncertainty over TIM network deal with CDP pushed the phone group shares to a fresh record low on Thursday.

($1 = 1.0033 euros)

(Reporting by Elvira Pollina; Editing by Valentina Za and Josie Kao)