By Elvira Pollina and Paolo Chiriatti
ROME (Reuters) -Telecom Italia (TIM) could learn as early as this week whether it will receive 1 billion euros ($1 billion) it is owed by Italy’s government, three legal sources said after the parties failed to agree an out-of-court settlement by Monday’s deadline.
The government has requested the payment, which stems from a dispute dating back to 1998 relating to the liberalisation of the country’s telecoms sector, be suspended until the case goes to Italy’s supreme court later this year.
TIM and the government were given until Jan. 20 to reach a possible out-of-court settlement. They informed the court at a closed-door hearing on Monday that they had failed to do so, the sources said.
The court is now expected to decide as soon as this week on the payment suspension request, the sources added.
TIM CEO Pietro Labriola said in November that any cash from the case could be used to support shareholder reward plans.
With its finances under strain until last year’s multi-billion euro sale of its core fixed-line network to KKR, TIM has suspended any payments to shareholders in recent years.
Due to present a strategy update next month, Labriola is under pressure to resume dividend payments.
The 1 billion euro payment obligation follows a decision by a lower court in April which ruled in favour of TIM and ordered the government to pay the sum, which includes around 500 million euros in interest that has piled up over the years.
The government appealed against the April ruling, and sought a suspension of its effects until its appeal is heard in front of Italy’s top court.
The supreme court’s decision is expected between the end of this year and early 2026. In a similar case, the top court ruled in favour of Vodafone.
In terms of remunerating investors, TIM is also counting on the planned 700 million euro sale of its submarine cable unit Sparkle to the state and Spanish fund Asterion.
Contrary to expectations, TIM’s board will be unable to approve the sale this week, three sources with knowledge of the matter said separately, because banks still have to finalise a 600 million financing package supporting the binding offer.
($1 = 0.9696 euros)
(Reporting by Paolo Chiriatti in Rome and Elvira Pollina in Milan; Editing by Valentina Za and Susan Fenton)
