Italy's TIM tells network bidders to raise offers, sets new deadline

By Elvira Pollina

MILAN (Reuters) -Telecom Italia (TIM) on Wednesday said a preliminary offer for its landline grid by Italian state lender CDP and Macquarie undervalues the asset, and set a new deadline of next month for improved bids.

After a board meeting, TIM said it would seek a new round of proposals from CDP and Macquarie, as well as from rival suitor KKR by April 18.

"In order to enable both the (CDP/Macquarie) consortium and KKR to submit their improved offer..., the board mandated Chief Executive Officer, Pietro Labriola, to initiate a structured process", TIM said.

The sale of the grid is a key plank of Labriola's plan to revamp the former national phone monopoly and take a chunk out of its debt pile of 25 billion euros ($26.4 billion).

CDP, which owns a 10% stake in TIM, submitted a non-binding bid earlier in March together with partner Macquarie as part of a plan to combine the network assets with those of TIM's smaller rival Open Fiber.

CDP and Macquarie are both investors in Open Fiber. The joint offer values TIM's grid at some 18 billion euros ($19.3 billion), including debt, sources have said.

KKR, which already owns a minority stake in TIM's fixed network, offered up to 20 billion euros, including a 2 billion euros earnout mechanism - a valuation which was also billed as too low by TIM last month.

TIM said it would make available to CDP and Macquarie "specific information" to help with a reassessment of their bid, as already was done with KKR last month.

TIM's top investor Vivendi, which quit the board in January after a round of fruitless talks with the government over the future of TIM, has already signalled it wants a higher valuation.

Vivendi has indicated a price tag of 31 billion euros to back selling the grid. TIM itself has pitched a valuation of 25 billion euros, sources told Reuters last year.($1 = 0.9488 euros)

(Reporting by Elvira PollinaEditing by Keith Weir)