By Giuseppe Fonte
ROME (Reuters) -The Italian government signalled on Saturday it still backed a proposed deal for Telecom Italia (BIT:TLIT) (TIM) to sell its network grid to U.S. fund KKR after the emergence of a rival plan for the telecoms group.
"Any other initiative is not part of the government's intentions," a government source said, referring to an alternative strategy put forward on Friday by a London-based investment firm representing shareholders owning under 3% of TIM.
KKR has made a binding offer for TIM's main network infrastructure that values it at around 23 billion euros ($24 billion), including debt and some variable components.
The TIM board is due to review the offer, central to the company's efforts to cut its huge debt, at meetings scheduled for Nov. 3 and Nov. 5.
The government has effectively endorsed KKR's approach, authorising the Treasury to take a 15-20% stake in TIM's grid for up to 2.2 billion euros alongside the U.S. fund.
Responding to the alternative strategy, the source noted that the government "has (already) made other decisions that envisage another plan", adding that the KKR offer was the only proposal in which it was involved.
In a statement on Saturday, TIM said the rival document would be submitted to its board at its Nov.3 meeting once the share ownership of the firm behind it had been verified.
However, it emphasised that preparatory work to review the KKR offer was continuing and it would be discussed as planned at the forthcoming board meetings.
TIM's strategy had been challenged by Merlyn Advisors and a former TIM senior executive in a letter dated Oct. 27.
Under their alternative scheme, TIM would retain its entire fixed network business as well cloud and digital services operations, while selling its domestic retail business and its prized Brazilian unit.
The KKR deal has also faced major reservations from TIM's top investor, French media group Vivendi (EPA:VIV).