(Bloomberg) -- Telecom Italia SpA is seeking a valuation of around 20 billion euros ($21.5 billion) for the landline network it plans to sell to a state lender and international funds, according to people with knowledge of the matter.
The proceeds would allow the former phone monopoly to cut its multi-billion-dollar debt pile, accelerating Chief Executive Officer Pietro Labriola’s turnaround plan, said the people, who asked not to be named because the internal calculation isn’t public. The valuation is preliminary and could change, they added.
A spokesman for Telecom Italia couldn’t be reached for comment outside business hours.
On Sunday, Sunday Telecom Italia announced it’s preparing to sell off the entirety of its network in a plan that would shift control of the asset to the Italian state.
Read more: Telecom Italia Kicks Off Plan to Sell Network to State, Funds
The phone carrier said it reached a preliminary, non-binding accord with state lender Cassa Depositi e Prestiti SpA, which serves as the government’s financial arm, to combine its grid with a similar network owned by smaller rival Open Fiber SpA, which is controlled by CDP.
The accord was also signed by Open Fiber and Teemco, a Luxembourg company controlled by US private equity firm KKR & Co., which owns a stake in Telecom Italia’s FiberCop SpA fiber unit. Macquarie Group Ltd., a minority investor in Open Fiber, also signed the deal.
The news marks the end of an era for the carrier, which was privatized in 1997 and has struggled with financing for decades. The ex-monopoly is now hoping to use proceeds from the network sale to cut its staggering debt pile and kick-start a fiber rollout for a country that lags far behind its European peers.
Telecom Italia earlier this year rejected a 10.8 billion euro takeover proposal from KKR, preferring to push ahead with an in-house plan aligned with the Italian government’s goal of building a single national fiber network while avoiding duplicate investments.
Labriola also wants to spin the company’s commercial services off into a separate unit. That process will need approval from Italian and European authorities, which could take several months, people familiar with the matter said.
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