TIM to start review of CDP's grid bid, top investor unimpressed

By Elvira Pollina

MILAN (Reuters) -Telecom Italia (TIM) will on Friday conduct an initial review of an offer for its network grid led by Italian state lender CDP, with the bid drawing a cool reception from top investor Vivendi.

CDP has teamed up with Australian infrastructure fund Macquarie to bid for Italy's most important piece of telecommunications infrastructure, rivalling U.S. fund KKR .

CDP and Macquarie are targeting the whole of a venture including TIM's fixed access network and submarine cable unit Sparkle. The asset is deemed strategic by the Italian government, which wants to secure control of the infrastructure while protecting jobs.

The CDP-Macquarie bid value TIM's grid at about 18 billion euros ($19.2 billion), including debt. That is similar to KKR's approach which has already been billed as inadequate by TIM which has asked KKR to come back with a better offer by the end of March.

The opinion of the Italian group's "related parties committee" - which comprises five TIM directors - is required as CDP holds a 10% stake in TIM. The committee meets on Friday.

TIM's board is then expected to meet on March 15 to give its initial response to CDP's proposal. The former phone monopoly has been under pressure for years and is looking to sell assets to fund a revamp and cut debt.

Vivendi, whose support is key for any sale to go through at TIM shareholder meetings, has set a price tag of 31 billion euros to back a sale of TIM's most valuable asset.

In Vivendi's view, a sale of TIM's grid under the current terms proposed by CDP and Macquarie would leave too much debt and too many staff with TIM's service business, sources familiar with the matter said.

Similar concerns are shared within TIM's board, the sources added.

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(Reporting by Elvira Pollina, editing by Gavin Jones and Keith Weir)