MILAN (Reuters) -Telecom Italia (TIM) shares fell sharply on Thursday as a planned network sale to revamp the battered former phone monopoly faces hurdles due to lack of support from top investor Vivendi (EPA:VIV), analysts and traders said.
TIM shares fell as much as 3.5%, underperforming Italy's blue chip index, after the company on Wednesday granted U.S. fund KKR a two-week extension, until Oct. 15, to submit a binding offer for its landline grid.
Plans to sell have met with strong reservations from French media giant Vivendi, which is demanding a higher price and an extraordinary shareholder vote on any deal involving the group's most valuable asset.
TIM has sought legal advice over the approval process for the network sale.
Its directors have reviewed some preliminary legal opinions which may support board approval of the deal without a shareholders' vote, a potential blow to Vivendi, according to people familiar with the matter.
"The procedure to approve the sale remains controversial," Intesa Sanpaolo (BIT:ISP) said in its daily note, adding that the lack of an agreement with Vivendi and the potential for a consequent legal dispute remained a key risk.
KKR last month secured the backing of Prime Minister Giorgia Meloni's government as it authorised the Treasury to join the fund's bid for the country's largest telecoms infrastructure, an asset deemed of strategic national interest.
Economy Minister Giancarlo Giorgetti is set to meet Vivendi's top representatives in the coming days to discuss the network deal, sources have previously said.