Italy, Spanish fund make $733 mln bid for Telecom Italia subsea unit

Italy’s Treasury and Spanish fund Asterion have made a 700 million euro ($733 million) joint binding offer for Telecom Italia’s (TIM) submarine cable unit Sparkle, the ministry and the former phone monopoly said on Thursday.

The sale is part of infrastructure asset sales by TIM Chief Executive Pietro Labriola, aimed at cutting the company’s debt and focusing on its services business.

The ministry is bidding with Retelit, an Italian fibre network operator owned by Spanish infrastructure fund Asterion.

The offer, which confirmed a preliminary valuation for the unit, is valid until Jan. 27, TIM and the ministry said in separate statements.

“The deal would grant TIM additional resources to revamp its business and cut debt, without hitting its cash generation profile”, broker Intermonte said in a daily note.

Rome is keen to secure control of Sparkle, a firm deemed of strategic importance due to its cable network of more than 600,000 km (372,823 miles) that transmits information between countries in Europe, the Mediterranean and the Americas.

TIM has scheduled a board meeting on Friday to start discussing the offer, people with knowledge of the matter said.

As a result of the sale, the Treasury is expected to have a stake of about 70% in Sparkle, with Asterion holding the remainder, the people said.

TIM finalised the sale of its domestic fixed line access network to U.S. fund KKR at the start of July. The deal, worth up to 22 billion euros, was backed by the Italian government, which took a 16% stake in the network venture.