By Elvira Pollina

MILAN (Reuters) -Telecom Italia shares rose on Monday after Italy’s greatest cellphone group mentioned it could pursue a home broadband deal, whereas additionally participating in talks with KKR over the U.S. fund’s 10.8 billion euro ($12 billion) takeover strategy.

After a close to six-hour board assembly on Sunday, TIM mentioned it had requested its CEO and chairman to interact in talks with KKR to search out out extra about its potential bid. KKR declined to remark.

The board additionally renewed its assist for a plan which new CEO Pietro Labriola offered in early March and mentioned TIM would proceed to discover a tie-up with state-backed broadband rival Open Fiber.

The long-mooted Open Fiber merger might present a 1 euro enhance to TIM’s shares based on inner calculations, sources accustomed to the matter have mentioned.

Labriola, who received the highest job in January with backing from main TIM investor Vivendi (OTC:), has mentioned his plan is just like KKR’s undertaking. By executing it in-house, TIM would profit from the features the non-public fairness agency targets in its turnaround efforts, he mentioned.

Labriola’s plan entails separating TIM’s companies arm from its infrastructure belongings, a transfer that might ease a mix of TIM’s community with that of Open Fiber, making a single wholesale-only broadband supplier.

To this finish, TIM mentioned it could proceed discussions with CDP, Italy’s state investor which controls Open Fiber however can also be TIM’s second-biggest shareholder.

Tim’s shares rose as a lot as 10% to 0.30 euros on Monday, after hitting an all-time low of 0.22 euros final week as traders unwound bets on KKR’s 0.505 euros per share provide ever materialising.

“The KKR potential provide stays the decrease chance final result right here,” Exane BNP Paribas (OTC:) analysts mentioned.

“The corporate are ensuring they observe the proper procedures to make sure that they can’t be accused in the way forward for neglecting shareholders sooner or later.”

TIM had hoped to safe a preliminary settlement with CDP over Open Fiber in time for Sunday’s board assembly however discussions over a tie-up that raises competitors points on the European stage would require longer, sources have mentioned.

“Administration have shifted message … and at the moment are pushing

the Open Fiber merger angle as soon as once more,” Exane BNP Paribas mentioned.

“Within the brief time period the hope of ‘one thing’ taking place might be sufficient to proceed to attract a line underneath the shares.”

($1 = 0.9132 euros)