(Bloomberg) -- Before going public with a $12 billion offer for Telecom Italia SpA, U.S. buyout firm KKR & Co. needed to make sure one key stakeholder was on board: Italian Prime Minister Mario Draghi. 

The KKR team was clear that they couldn’t proceed with the bid unless they had the government’s support, according to people familiar with the matter. So earlier this month they headed to Rome to sit down with Italian officials. Draghi had some conditions, the people said, but the government ultimately gave New York-based KKR the green light. 

The bid announced last Sunday offers 74-year-old Draghi a potential solution to Italy’s longstanding problems with the troubled former phone monopoly. But it could also do a lot more than that. 

It will give the government more power to execute on Draghi’s plans to upgrade the economy while cementing the country’s economic ties to the U.S. and Joe Biden’s administration. It might also please French President Emmanuel Macron, a firm ally of the Italian leader, and one he needs on side given that Telecom’s biggest shareholder is Paris-based Vivendi SE.

Read more: Macron and Draghi Have Plans to Fill the Void Left by Merkel 

Telecom Italia has seen its stock price tumble more than 30% since June and issued two profit warnings as it struggled to defend its position in the fiercely competitive Italian market.

Yet the company has a key role to play in Draghi’s plans to upgrade the Italian economy. The phone operator could receive billions of euros in European Union recovery funds to build ultra-fast broadband connections across the country. So in considering the bid, the prime minister’s team was focused on one critical part of the company: the broadband network.

“The government has three priorities in analyzing this offer and the future of Telecom Italia,” Draghi said at a press conference on Wednesday. “The first is protecting employment, the second is protecting the technology, which is of great value, and the third is the protection of the network.” A spokesman for the government declined to comment further when contacted by Bloomberg. 

Draghi is in the perfect position to understand the complexities and benefits of the deal. Before joining Goldman Sachs in 2002 he spearheaded a vast privatization program and was very familiar with Telecom’s strategic value along with its problems. The government back in 2017 deployed its rarely used “golden power” to rein in the influence of Vivendi.  

So when KKR came knocking, he was engaged and all too familiar with Telecom’s history. 

The structure that was informally agreed between KKR and the government would see the network controlled by the Italian state and carved off into in a separate company with a solid stream of revenue. The deal would also see a bigger role for state lender Cassa Depositi e Prestiti SpA, Telecom Italia’s second biggest investor. 

Cassa Depositi, which also controls Telecom Italia’s smaller rival Open Fiber SpA, will present its new business plan Thursday as Chief Executive Officer Dario Scannapieco looks to put his stamp on the state lender. Scannapieco, a longtime ally of the prime minister, was appointed earlier this year as Draghi looked to involve Cassa Depositi in his plans for fixing up the economy. 

KKR could get to control the company’s commercial operations and its mobile phone business. 

A deal with KKR would provide an obvious benefit for Italy’s economic ties with the U.S. The political blessing from France’s is more personal. 

The deal would likely be welcomed by Macron, according to two people with knowledge of the discussions, even though it would end Vivendi’s control of the phone operator. That’s because Vivendi’s billionaire owner Vincent Bollore has been stirring up right-wing opposition to Macron ahead of next year’s election.  

Read more: Billionaire Behind ‘French Fox News’ Could Torment Macron 

Macron and Draghi have become close allies since the former European Central Bank chief took office in Italy in February. The future of Telecom Italia is likely to come up when the French leader visits Rome to sign a bilateral treaty Friday that will cement their countries’ cooperation. 

But KKR needs to square off Vivendi. The French media-conglomerate has so far resisted KKR’s offer while indicating it might be ready to do a deal at a higher price. But it might still have to accept a loss on its initial investment. 

Read more: KKR to Weigh Raising Telecom Italia Bid to Win Over Vivendi

In the meantime, Vivendi is going on the offensive. It will seek to oust Telecom Italia Chief Executive Officer Luigi Gubitosi at a board meeting scheduled for Nov. 26. Vivendi has repeatedly clashed with the CEO and suspects that he may have solicited the bid from KKR, people familiar with the matter said earlier this week. 

Gubitosi’s drive to boost premium services has failed to reverse a precipitous decline in Telecom Italia’s shares, and he’s been under mounting pressure from Vivendi to accelerate a turnaround ever since he issued a surprise profit warning last month.

Draghi’s administration meanwhile has set up a special committee to monitor talks between Telecom Italia and KKR which will focuses who will control the network and on any potential job losses -- which is one concern the government does have. The group held its initial meeting this week. 

On Sunday night as the official details of the offer emerged, Draghi’s office was closely involved as the government swiftly delivered its verdict. The offer is “good news” for Italy, the government said. 

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