Telecom Italia opted to start formal talks to assess a €10.8 billion non-binding offer for the group by KKR almost four months after the US investor made its initial approach, as the Italian operator continues to weigh options to boost its financial position.

However, Telecom Italia also indicated it will explore a possible tie-up with state-backed company Open Fiber, reviving a long-standing plan to create a single fibre network company in Italy following an internal revamp.

The latest developments come following a meeting by the operator’s board of directors yesterday (13 March).

Investment fund KKR launched its bid to buyout Telecom Italia’s shares and take it private in November 2021. The operator’s new CEO Pietro Labriola subsequently put forward a plan to separate the Italian operator into two units.

Although KKR’s plan for Telecom Italia was understood to be similar to Labriola’s, he was reportedly convinced doing it internally could generate more value for investors.

Both plans are said to involve separating infrastructure assets from services operations.

Next steps will see Labriola and Telecom Italia chairman Salvatore Rossi hold formal talks with KKR to gather more details on the latter’s proposals. Informal discussions with advisers have already taken place.

At the same time, the Italian operator stated it will continue negotiations with state lender CDP on a possible merger with Open Fiber.

CDP owns a 9.1 per cent stake in Telecom Italia and as much as 60 per cent of Open Fiber.

KKR is said to remain keen on buying into Telecom Italia, but at a lower price of around €0.40 per share compared with the original €0.505 bid.

Telecom Italia’s largest shareholder Vivendi reportedly backed Labriola by throwing its support behind his proposed transformation plans.