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

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  • Undersecretary to Cabinet asks state lender to take over TIM
  • The application would be part of the project to create a national network champion
  • TIM in talks with CDP on selling billions of networks to reduce debt

ROME, Nov 11 (Reuters) – A possible takeover of Telecom Italia (TLIT.MI) (TIM) by state lender Cassa Depositi e Prestiti (CDP) needs to be discussed thoroughly within the government, said the Italian Minister of Economy, signaling a cautious stance on the proposal.

“Many ministers are involved, we need to discuss it,” Economy Minister Giancarlo Giorgetti said when asked if he backed a plan drawn up by Undersecretary Cabinet Alessio Butti.

As part of the so-called “Minerva” project, CDP would launch a takeover bid for TIM in order to pursue the objective of a state-controlled fiber company combining the network of the former telephone monopoly with that of its smaller Open Fiber rival.

TIM, struggling with a debt of 25 billion euros, pursued a different plan.

The former telephone monopoly last month extended talks with CDP over a bid for its fixed network until the end of November, under a program sponsored by the previous government of Mario Draghi.

Sources told Reuters that Giorgetti had reservations about Butti’s plan, which envisions TIM retaining the network and selling its service operations and listed unit in Brazil.

Treasury-owned CDP controls Open Fiber and has a 10% stake in TIM, whose shares are trading at historic lows.

On Friday, TIM stock extended earlier losses after Giorgetti’s comments to end down 3.4%, underperforming the Italian blue chip index which closed flat. (.FTMIB)

Some banks are also presenting alternative proposals involving a government-backed takeover bid for TIM, with Vivendi and infrastructure funds joining a process to privatize TIM, sources said.

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

RECOVERY PLAN

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

TIM’s main investor, Vivendi, is seeking 31 billion euros ($31.90 billion) to back the sale, more than 10 billion more than CDP’s valuation, sources said.

Under pressure for years in its fiercely competitive home market, TIM is seeking an overhaul centered on splitting its operations into multiple units to help reduce debt.

As part of those efforts, it divested its business services arm, a move that should pave the way for the sale of a minority stake in the company.

Rome has special anti-takeover powers to protect companies deemed strategically important from foreign interests. He could use them to stop any dealings over TIM’s assets.

($1 = 0.9717 euros)

Reporting by Giuseppe Fonte and Elvira Pollina Editing by Keith Weir

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