Italy's CDP sounds out banks, funds on rival bid for TIM grid, sources say

Brookfield Infrastructure

07/02/2023 16:12

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      CDP prepares response after KKR move for telecoms grid
    

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      TIM board to meet on Feb. 24 to decide on KKR's proposal
    

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      Italy looks at ways to put TIM's grid under state control 
    

  
    By Elvira Pollina and Giuseppe Fonte
       MILAN, Feb 7 (Reuters) - Italian state lender CDP is
sounding out banks that could help  finance its offer for
Telecom Italia's landline grid while also speaking to
infrastructure funds though time is tight to recruit another
co-investor, sources close to the matter said. 
    CDP is seeking to finalise its bid after U.S. investment
firm KKR  KKR.N  last week filed its own offer for the same
Telecom Italia (TIM) asset.
    KKR, which already owns a minority stake in the former phone
monopoly's network, put forward a non-binding proposal to
acquire a controlling stake in a new company comprising the
network as well as TIM's submarine cable unit Sparkle.
    Two sources familiar with the matter told Reuters KKR's
approach valued the venture at about 20 billion euros ($21.4
billion).
    TIM, which has called a board meeting for Feb.24 to decide
on KKR' s approach, said the U.S. fund has indicated Feb.28 as
the deadline for its proposal, adding it remained open to assess
alternatives in the meantime.
    Carving out and ceding control of TIM's prized landline is a
focal point of TIM's CEO Pietro Labriola strategy to reshape the
debt-laden group.
    Treasury-owned CDP, which is a shareholder in TIM, was also
studying a multi-billion offer for the network and still wants
to bid for TIM's grid after KKR's move, people familiar with the
matter told Reuters.      
    Among others, CDP has been sounding out Blackstone  BX.N ,
Global Infrastructure Partners (GIP) and Brookfield  BIPC.N  for
a role in its potential bid, the people said, declining to be
named as discussions are private.
    Blackstone declined to comment. GIP and Brookfield did not
immediately respond to a request for comment.
    The sources also said CDP is tapping banks specialized in
infrastructure financing to test their interest in funding a
potential bid, including UniCredit  CRDI.MI , Intesa Sanpaolo
 ISP.MI , Bnp Paribas  BNPP.PA  and Credit Agricole  CAGR.PA .
        The banks had no immediate comment.
  
    MACQUARIE ROLE
    One of the sources said CDP is likely to present a bid with
Australian fund Macquarie only, as there is little scope for
another fund joining the venture given the tight deadline. 
    The bid could come as early as next week, the person said,
cautioning deliberations are still ongoing.
    Macquarie is a minority investor in Open Fiber, a
wholesale-only fibre optic unit controlled by CDP and it has
been involved for months in a plan to combine the two network
infrastructures.
    Prime Minister Giorgia Meloni repeatedly said her government
wants to secure public control of TIM's network.
    But there is no common ground yet within her administration
on how to reach such a goal and it was no clear whether a CDP
bid would receive the blessing of the Treasury.
        Economy Minister Giancarlo Giorgetti believes Rome has
"multiple options" to put TIM's network under strategic
government control, a separate source said, without elaborating.
  
    In its approach for TIM, KKR has left the door open to a
public entity to become a shareholder in the network company, a
person briefed with the matter said last week.
    A sale of a majority stake in the network could enable
cash-bleeding TIM to cut its 25.5 billion euro debt pile and
help promoting heavy investments needed to upgrade the
infrastructure from old copper to fibre.
 ($1 = 0.9359 euros)
 (Reporting by Elvira Pollina in Milan, Giuseppe Fonte in Rome,
additional reporting by Valentina Za; Editing by Keith Weir)
 ((elvira.pollina@thomsonreuters.com;))