By Elvira Pollina and Giuseppe Fonte
MILAN/ROME (Reuters) -Italy’s new government is seeking fresh options for the future of former phone monopoly Telecom Italia as a planned bid for its landline grid by state investor CDP due by Wednesday is seen as unlikely to materialise.
Championed by the previous government of Mario Draghi, the multi-billion-euro preliminary bid is part of a broader project to combine TIM’s network assets with those of smaller rival Open Fiber to create a unified broadband champion under CDP’s control.
Due by this Wednesday, Nov. 30, an offer would also be central to TIM CEO Pietro Labriola’s plan to split the struggling phone group into several units and cut its 25 billion euro ($26 billion) debt.
But key officials in Giorgia Meloni’s right-wing government have expressed strong reservations about CDP’s plans for TIM, making a non-binding bid from the state lender for the network unlikely, three sources told Reuters.
Top government officials are expected to meet later on Monday to discuss plans for TIM, among other issues.
CDP has not yet called a board meeting to sign off any offer ahead of this week’s deadline, another person familiar with the matter said.
Marking a break with the past, Meloni on Friday entrusted the government’s broadband strategy to Cabinet Undersecretary Alessio Butti, who has openly criticised CDP’s plans for TIM.
Butti has called instead on Treasury-owned CDP to take over cash-bleeding TIM, whose shares are trading close to record lows, in full to then sell its service operations, including its Brazil-listed unit.
Economy Minister Giancarlo Giorgetti last week reiterated that the government wants to win control of TIM’s network which is deemed of strategic interest, adding such a goal can be reached in “several ways”.
Giorgetti also warned that Butti’s plans for TIM needs to be extensively discussed within the government.
The government did not provide any clarification on whether CDP will bid for TIM’s network by the deadline, the head of Italy’s biggest union CGIL said after a meeting with Meloni’s head of staff on Monday.
“We called for a quick decision, even in the event the government wants to change plans which were drafted so far,” Maurizio Landini told reporters,
Analysts say designing a new setup for any TIM-Open Fiber deal would require at least a year, exposing TIM to fresh uncertainty over its future at a time when rising rates increase the drain on the group’s cash flow from interest payments.
“How the government intends to reach its stated objective to have a (single) telecommunications grid in public hands remains unclear,” Intesa Sanpaolo wrote in a research note.
“The timing to find a path starts to narrow considering that TIM’s available liquidity covers debt maturities until mid-2024 and debt refinancing looks tougher than in the past.”
TIM ended 1.2% down on Monday after falling as much as 4% in early trades. ($1 = 0.9549 euros)
(Reporting by Elvira Pollina and Giuseppe Fonte; writing by Valentina Za;Editing by Keith Weir)