A bidding war between KKR and a consortium including Italian state lender CDP Equity for Telecom Italia fixed spin-off Netco was rumoured to be almost over, with Bloomberg reporting the state-owned entity was pulling out of a potential deal.

The news website claimed CDP was set to drop its backing for an offer, which had been made together with Macquarie Infrastructure and Real Assets (Europe). KKR had made a rival bid, but both were branded inadequate by Telecom Italia’s board last week.

Earlier this month, Reuters’ raised the prospect CDP could join forces with KKR to buy the assets, with claimed support for this by Italian government figures.

However, in a separate story in the wake of Bloomberg’s revelations, the news website reported an alliance with KKR could face legal opposition from Macquarie.

Telecom Italia’s board have set a deadline of 9 June for improved offers for Netco, a business which comprises its fixed-line assets and international submarine cable business Sparkle.

In its statement last week, the operator indicated at least one of the suitors vying for the deal had expressed it could improve its offer.