By Elvira Pollina
MILAN (Reuters) -French telecoms group Iliad is exploring a possible tie-up of its Italian unit with Telecom Italia (TIM) and met Italy’s economy minister and top government officials this week to inform them, a source with knowledge of the matter said.
Italy considers TIM as strategic and any deal involving its assets needs Rome’s backing, as the government has ‘golden’ powers to vet any investment handing the buyer a stake above 3%.
Iliad CEO Thomas Reynaud told Giancarlo Giorgetti and other top officials on Tuesday any deal would not break TIM up and would safeguard jobs at the former monopoly, the source said.
The Italian Prime Minister’s office declined to comment on Friday while the Treasury was not immediately available. Telecom Italia declined to comment.
Italian state lender CDP is TIM’s second-largest investor behind France’s Vivendi, which is considering options for a stake worth some 1 billion euros at current prices.
Private equity firm CVC is interested in buying Vivendi’s stake in TIM, sources have previously told Reuters.
Last year, TIM completed a landmark deal to sell its fixed-line asset network to a consortium led by U.S. fund KKR. It is due to update its business strategy next week.
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Founded by French billionaire Xavier Niel, Iliad launched low-cost mobile services in Italy in 2018, intensifying already fierce price competition in its mobile market.
Iliad, which now serves more than 11 million customers in Italy, has repeatedly called for consolidation to reduce the number of network operators in the country from four to three.
It attempted to buy Vodafone’s Italian subsidiary last year and had already considered a combination with TIM.
Italian newspaper La Stampa reported on Friday that Iliad had given a mandate to Boston Consulting Group (BCG) to study a possible deal, while Corriere della Sera said Iliad, assisted by Lazard, had talks with Italian economy ministry officials.
Iliad is also working with Mediobanca, the source told Reuters.
BCG declined to comment on the report. Lazard and Mediobanca were not immediately available to comment.
TIM’s Milan-listed shares rose by nearly 3% to a one-year high, against a slightly negative blue chip index.
(Reporting by Elvira Pollina in Milan, additional reporting by Giuseppe Fonte in Rome, editing by Giulia Segreti and Alexander Smith)
