TIM and CDP in Italy set to reach preliminary deal on single network – sources

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The Tim logo is seen at its headquarters in Rome, Italy November 22, 2021. REUTERS/Yara Nardi/File Photo

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MILAN, May 29 (Reuters) – Telecom Italia (TIM) and state-owned lender CDP are expected to reach a preliminary agreement on Sunday to merge the telephone group’s fixed network assets with those of rival state-backed broadband company Open Fiber. , three sources close to the matter said.

The move will pave the way for a single broadband network, as TIM (TLIT.MI) CEO Pietro Labriola irons out a turnaround plan centered on a complete separation of the group’s fixed network from service operations. Read more

The boards of TIM and CDP are due to meet on Sunday to approve a framework agreement, with the aim of brokering a binding deal on a network tie-up with Open Fiber by October, one of the sources said.

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Under the framework agreement, CDP, which is TIM’s second largest investor with a 10% stake and owns a 60% stake in Open Fiber, would control the combined network entity, the sources added.

Italy wants to create a single champion of the broadband network to avoid duplication of investments and accelerate the deployment of optical fiber as well as promote the digitalization of the economy.

Under pressure for years in its home market, debt-ridden TIM plans to spin off its landline network, an asset for which analysts have put valuations at between 15 and 20 billion euros ($16 billion – 21.45 billions of dollars).

Although the final structure of the deal with Open Fiber has not been decided, options being discussed include an outright sale of TIM’s landline network, two separate sources said.

The framework agreement is backed by infrastructure funds Macquarie (MQG.AX) and KKR (KKR.N), which hold minority stakes in Open Fiber and the TIM network respectively, the sources said.

KKR, which spent 1.8 billion euros to buy a 37.5% stake in TIM’s last mile network unit FiberCop and attempted a 10.8 billion takeover bid. Euros on TIM, previously expressed concerns about regulatory and valuation issues related to the single network plan. Read more

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Reporting by Elvira Pollina; written by Elvira Pollina and Francesca Landini; edited by Nick Macfie

Our standards: The Thomson Reuters Trust Principles.

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