By Elvira Pollina

MILAN (Reuters) – Telecom Italia On Friday, (MI:), (TIM) will appoint Pietro Labriola to the role of CEO. This is as the ex-phone monopoly considers a possible response to a U.S. equity investor KKR’s takeover offer. Labriola is a veteran TIM executive, who oversaw TIM’s Brazilian operations the past three years. He was elevated to general manager after Luigi Gubitosi, former CEO, resigned in November.

TIM has been facing pressure from its local market over the years and is in debt. To meet Italy’s digital plan to improve broadband speeds, TIM must upgrade its network. Labriola has been supported by Vivendi (OTC) the biggest investor in the group.

Vivendi (which holds 24% in TIM), has criticised KKR for its 10.8 billion Euro ($12.2 Billion) offer. It said it did not reflect the real value of Italy’s largest telecoms operator.

Sources close to the matter say that CDP, the second largest investor in TIM, will also support Labriola’s nomination at a Friday board meeting. Labriola is already responsible for developing a plan for the restructuring of the group, which would be a reference point for the board’s decision to reject KKR.

Sources said Labriola had presented proposals to separate the fixed network operations and services of the company in a preliminary draft that was submitted to the board.

The wholesale-only segment of TIM’s infrastructure would be the focus for “NetCo”, which will include TIM’s infrastructure assets. The sources said that it would also include the submarine cable unit Sparkle and assume a large portion of the debt and personnel.

This could be a way to revive a stalled plan for TIM to combine its fixed network assets and those of rival fibre optic company Open Fiber. CDP (which owns 60% Open Fiber) would most likely be a key stakeholder in any combined venture to build TIM’s network.

Vivendi, which last month https://www.reuters.com/markets/deals/vivendi-is-open-discuss-with-rome-over-state-control-tims-network-2021-12-05 reversed its long-standing opposition to TIM’s handing over control of its prized network infrastructure, could then focus on TIM’s retail service businesses, which include video content platform TimVision, one of the sources said.

KKR’s proposal to buy TIM is subject to TIM’s board’s approval and that of the Italian government. The Italian government considers the group’s network infrastructure strategic, and therefore has the special power and authority to stop any unwelcome interest.

The sources claimed that KKR is planning to seize 37.5% TIM’s last miles grid and hand CDP a major role in oversight.

Rome’s next week’s election will see any government decision regarding TIM’s future in Rome.

($1 = 0.8821 euros)