MILAN (Reuters) -Telecom Italia (TIM) shares dropped more than 3% in early trade on Monday as a government-sponsored offer rivalling KKR's bid for the former phone monopoly's prized grid failed to come through over the weekend.
Italian state lender CDP is still trying to secure key government backing to submit an offer together with Australian fund Macquarie, government officials said, dampening speculation fuelled by media reports last week.
Telecom Italia (BIT:TLIT) shares fell by 3.3% by 1018 GMT against a flat Italy's blue chips index
CDP, which is TIM's second largest investor, and partner Macquarie are looking to make an offer before Feb. 24, when the TIM board is scheduled to discuss a response to an approach from U.S fund KKR for a controlling stake for the same asset.
While Prime Minister Giorgia Meloni has repeatedly said her government wants public control of TIM's network, an asset seen as strategic, there is no common ground yet on how to achieve this.
Economy Minister Giancarlo Giorgetti is weighing "multiple options" to bring TIM's grid under strategic government control, and the acquisition of a controlling stake through state-run firms is not the only one, the officials said.
This month KKR, which already owns a minority stake in TIM's landline grid, submitted a non-binding bid for a controlling stake in a unit comprising TIM's domestic fixed network and submarine cable unit Sparkle.
KKR's approach value the infrastructure at some 20 billion euro, including debt and a 2 billion euros earnout, two sources familiar with the matter said.
CDP, which values TIM's infrastructure at some 18 billion euros, would include its broadband unit Open Fiber as part of its bid, boosting the value of the offer.
TIM's board may delay a decision over KKR's approach, asking the U.S fund for more time to study its proposal and awaiting clarifications of the government stance, separate sources added.
KKR's preliminary bid leaves the door open to a government-backed entity becoming a minority investor in the infrastructure with a stake of up 30% and some vetting powers on strategic issue, sources have said. The bid is due to expire at the end of this month.