Politics has not stalled Italy network deal talks-TIM CEO

MILAN (Reuters) -Talks between Telecom Italia (TIM) and state lender CDP to form a single network operator have not been halted by an early election to be held in Italy next month, TIM’s CEO said on Thursday, citing remarks from a top CDP official.

“Things are proceeding, the political environment is not blocking the activity,” TIM CEO Pietro Labriola told analysts, noting remarks by Pierpaolo Di Stefano, the CDP executive in charge of the single network project.

“This is not a Pietro Labriola or TIM statement, it’s a CDP statement”, Labriola added during a conference call to discuss quarterly earnings.

Under new CEO Labriola, TIM is seeking an overhaul of its business centred around ceding control of its landline grid to CDP in a bid to raise cash and cut its debt pile.

CDP would then merge TIM’s network assets with those of smaller rival Open Fiber. The state lender, which owns a 60% stake in Open Fiber, is TIM second largest investor.

The single network project has long been mooted and is seen as a way of increasing broadband speeds for Italian households and businesses. But obstacles remain in its path.

Besides valuation and regulation issues, the collapse of the coalition government led by Prime Minister Mario Draghi is seen as further complicating the plan.

The right-wing Brothers of Italy party, leading in polls ahead of next month’s election, has criticised CDP’s plans and wants talks to be suspended until a new government is in place.

LESS GLOOMY

Labriola was speaking after TIM trimmed its expected profit drop for 2022 after cost cutting and the contribution from the company’s Brazilian subsidiary helped second quarter earnings.

The executive said the company had kept unchanged its forecast for a “low single digit” revenue decrease this year to reflect a challenging macroeconomic environment including slowing growth and rising inflation.

TIM shares slipped 1.35% to around 0.22 euros after gaining in the previous session on the less gloomy profit outlook.

TIM is also considering a sale of a minority holding in the so-called TIM Enterprise business unit, combining its connectivity services for big clients as well as cloud, cybersecurity and Internet of Things operations.

Beside CVC, which made a non-binding bid for the venture in March, other players have expressed interest after the unit was presented at a capital market day in July.

“So now we are working to try to understand how we can extract the maximum value from this area”, the executive added.

(Reporting by Elvira PollinaEditing by Keith Weir)