Italy’s economy minister cautious over CDP takeover bid for TIM

By Giuseppe Fonte and Elvira Pollina

ROME (Reuters) -A potential takeover of Telecom Italia (TIM) by state lender Cassa Depositi e Prestiti (CDP) is something that needs to be extensively discussed within the government, Italy’s economy minister said, signalling a cautious stance over such a proposal.

“Many ministers are involved, we have to discuss it,” Economy Minister Giancarlo Giorgetti said when asked whether he was backing a plan drafted by cabinet undersecretary Alessio Butti.

Under the so-called ‘Minerva’ project, CDP would launch a takeover bid for TIM to pursue the goal of a state-controlled fibre company combining the former phone monopoly’s grid with that of smaller rival Open Fiber.

TIM, struggling with a 25 billion euro debt pile, has been pursuing a different plan.

The former phone monopoly last month extended talks with CDP over an offer for its landline grid until the end of November, under a scheme sponsored by the previous government of Mario Draghi.

Sources have told Reuters that Giorgetti has some reservations about Butti’s plan, which envisages TIM retaining the network and selling off its service operations and its Brazil-listed unit.

Treasury-owned CDP controls Open Fiber and holds a 10% stake in TIM, whose stock is trading close to record lows.

Some banks are also pitching alternative proposals entailing a government-backed takeover bid for TIM, with Vivendi and infrastructure funds joining a process aimed at taking TIM private, sources have said.

Butti said on Saturday the Minerva project was a “priority” for the government and that he would soon start talks with TIM’s stakeholders, including CDP.

TURNAROUND PLAN

A multi-billion euro sale of TIM’s network grid is a key plank of CEO Pietro Labriola’s turnaround strategy for the group but negotiations have been complicated by valuation issues.

TIM’s top investor Vivendi <VIV.PA> is seeking 31 billion euros ($31.90 billion) to back the sale, more than 10 billion above CDP’s valuation, sources have said.

Under pressure for years in its fiercely competitive domestic market, TIM is seeking a revamp centred on a break-up of its operations into several units to help cut debt.

As part of these efforts it has spun off its enterprise service arm, a move expected to pave the way to the sale of a minority stake of the venture.

Rome has special anti-takeover powers to shield companies deemed of strategic importance from foreign interest. It could use these to stop any deal for TIM’s assets.

($1 = 0.9717 euros)

(Reporting by Giuseppe Fonte and Elvira PollinaEditing by Keith Weir)

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