Under the deal Open Fiber will pay 200 million euros ($208 million) to use TIM's network infrastructure in the hard-to-reach so-called 'white areas'.

The commercial tie-up comes at a time when TIM and Open Fiber's top investor, state lender CDP - which also has a 10% stake in TIM - are in talks to clinch a preliminary agreement to merge the former phone monopoly's network infrastructure with those of state backed rival. ($1 = 0.9605 euros)

(Reporting by Elvira Pollina and Maria Pia Quaglia, editing by Keith Weir)