By Elvira Pollina

MILAN (Reuters), – The board of Telecom Italia CVC proposed Tuesday to purchase a portion of its enterprise services company. CVC’s directors received information about the proposal. KKR also discussed the matter.

CVC put a value at 6 billion Euros ($6.6 billion), including the debt, on what would become a new TIM enterprise service business. This was according to a source who spoke on Tuesday.

CVC’s interest comes as TIM Chief Executive Pietro Labriola pushes forward with a plan that will split TIM’s service business from its network operation as part of a broader strategy for reorganizing the debt-laden old phone monopoly.

U.S. Fund KKR presented a non-binding proposal for TIM in November. It valued the entire group at 33 Billion Euros (net debt excluded).

TIM left New York-based Fund awaiting an answer for close to four months. TIM agreed in March to continue with talks while pushing ahead with the standalone reorganisation that will unlock the group’s “untapped potential”.

Monday’s statement by TIM stated that it was still in discussions with KKR regarding the “attractiveness and actuality” of its proposal. Two sources familiar with the situation said that TIM had requested KKR clarifications regarding its offer by April 4.

Monday was also TIM’s day. CVC expressed its interest to establish a company that would include connectivity operations for corporate clients, as well as cybersecurity, cyber security, and IoT services.

It was La Stampa that first reported CVC’s assessment of the company, which is included in the proposal for the fund.

The targeted company is valued by analysts at between 5 billion and 10 million euros. CVC and TIM both declined comment.

BID INTEREST

Sources have indicated that the European private equity firm could be interested in a 49% share in the company once it is carved out.

CVC, also known as CVC Advisors Barclays (LON:) And Nomura requested a 10-week exclusive period of negotiations. This included eight weeks of due diligence.

The telcos are seeking to enhance broadband services and look for value in European telecoms firms. Private equity firms have been looking into whether they can find any.

One sticking point during negotiations was KKR’s request to do due diligence before formally submitting its bid. This was reiterated by the fund last week, according to two sources.

TIM sent a Monday letter to the U.S. fund asking KKR for clarification by Monday. Sources said that KKR was asked by TIM to confirm whether it would have done due diligence as required by the phone group.

TIM asked if the November price for equity of 10.8 Billion Euros was confirmed. TIM further sought information on financing the bid, after KKR stated that it wouldn’t make large-scale recourse to debt.

Sources said that KKR made a mention of recent volatility in the market, which raises questions about whether the terms of its original indicative proposal still stood.($1 = 0.9098 euros)

Additional reporting by Gianluca Selaro in Milan. Editing by Keith Weir and Valentina Za.