Italy gov't approves stake in Telecom Italia network

MILAN — The Italian government gave the green light Monday to a stake worth up to 2.2 billion euros in Telecom Italia's (TIM) fixed-line network, through a joint bid with US investment fund KKR.

Economy Minister Giancarlo Giorgetti said the council of ministers had approved a decree guaranteeing funds for the state to take an up to 20-percent stake in the network. 

The stake, "of up to 2.2 billion euros" ($2.4 billion) will enable Italy to play a role in "what we consider to be a decisive infrastructure for the country's future", Giorgetti told journalists.

The Memorandum of Understanding signed in early August with KKR provided for the economy ministry to take a minority stake in TIM's future company combining its fixed network and submarine cable subsidiary. 

The ministry is already a shareholder in Telecom Italia — which was privatised in 1997 and whose main shareholder is French media giant Vivendi — through the 9.8-percent stake held by the Italian Caisse des Depots.

Telecom Italia is seeking to sell its fixed network to pare down a huge debt pile, worth 26.2 billion euros ($28.8 billion). 

After months of suspense, TIM's board of directors in June approved the start of exclusive negotiations with KKR — which that month had raised its offer by two billion euros to 23 billion euros — aimed at obtaining "a conclusive and binding offer" by September 30.

The board rejected a lower offer from CDP and Australian fund Macquarie Asset Management, worth around 19.3 billion euros.

The choice of KKR was made despite objections from Vivendi, which had asked for 31 billion euros for the fixed network.