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Telecom Italia working on new business plan as assesses KKR offer – sources

The TIM logo can be seen at its headquarters in Rome, Italy on November 22, 2021. REUTERS / Yara Nard

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MILAN, Jan.4 (Reuters) – Telecom Italia (TIM) (TLIT.MI) is working with banks to develop a new business plan that could involve the split of assets as it studies options to help assess a takeover offer from US fund KKR (KKR.N), two sources familiar with the matter said on Tuesday.

Debt-laden TIM received a non-binding takeover approach from KKR in November, which indicatively valued the former telephone monopoly at 33 billion euros ($ 38 billion) including debt.

But a power vacuum sparked by the ouster of CEO Luigi Gubitosi following a series of profit warnings last year has delayed the group’s response to KKR, which requested access to the company’s data. company before making an official offer.

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KKR’s offer is conditional on support from the company’s board of directors and the Italian government, but TIM’s largest shareholder, Vivendi (VIV.PA), said it does not reflect TIM’s value.

The new three-year plan, which will be developed on its own, will consider a range of options to increase value, such as the split of assets, including its strategic network business, the sources said.

TIM, which has appointed Goldman Sachs and LionTree as advisers to assess the KKR offer and other options, enlisted Italians Mediobanca and Vitali & Co to help them with their project, the sources added.

TIM’s fixed-line network is the group’s most valuable asset and its number 2 shareholder, state lender Cassa Depositi e Prestiti (CDP), has called for relaunching a stalled plan to merge the network with its rival of the optical fiber Open Fiber to increase the yields. and avoid double investments.

CDP owns 60% of Open Fiber.

On the KKR offer, CDP is working with Credit Suisse, the Italian Treasury with Lazard and Vivendi with Rothschild, the sources said.

TIM is expected to approve the guidelines for its new plan at a board meeting scheduled for Jan. 26, one of the sources said.

TIM, which has yet to find a replacement at Gubitosi, has mandated headhunter Spencer Stuart to find a new CEO and the process is expected to be finalized in January.

Pietro Labriola, TIM’s Brazilian business chief who was appointed chief executive in November, is seen as a top candidate, sources said.

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Reporting by Elvira Pollina and Stephen Jewkes Editing by Mark Potter

Our standards: Thomson Reuters Trust Principles.

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