SHARES in Telecom Italia (TIM) soared as high as 32 per cent yesterday, after US fund KKR presented a non-binding proposal to buy Italy's former phone monopoly, valuing it at €10.8bn (£9bn).

The move comes as a boardroom war rages at Italy's biggest phone group, which has been mired in crisis for years but is crucial to government efforts to expand broadband connectivity, according to Reuters.

KKR's offer, which is conditional on the Government's backing and the outcome of a four-week due diligence analysis, gives TIM, with its net debt of €22.5bn (£18.9bn), an enterprise value of €33bn (£27.7bn).

The deal also depends on Vivendi, one of the group's main stakeholders, agreeing the move.

According to reports by

Bloomberg, Vivendi is unlikely to support the offer, which it views as undervaluing the company.

The offer price, which TIM said was "indicative", would expose Vivendi's 24 per cent stake to a steep loss, for which it spent on average €1.07 per share.

The takeover approach follows TIM's $2bn deal with KKR in September, which gave the New York fund a 37.5 per cent stake in the telco's Fibercop unit, which supports its last-minute network.

More broadly, telecom stocks "rallied" yesterday according to Neil Wilson, chief analyst at Markets.com. Bringing this to the UK context, he said: "There has been a lot of speculation about a possible takeover of BT of late, so the move by KKR creates some further excitement that Altice's Patrick Drahi could launch a bid."

(c) 2021 City A.M., source Newspaper