* Board evaluates KKR proposal in special Sunday meeting
* Goal is to spin off fixed line, run it as govt-regulated
asset
* Embattled TIM CEO pushing to revive single-network plan
* Rival CVC, Advent also open to studying solution for TIM
* Govt says to follow plans for TIM's fixed line
(Adds Treasury's statement)
By Elvira Pollina, Valentina Za and Pamela Barbaglia
MILAN, Nov 21 (Reuters) - Telecom Italia (TIM) has
received a 10.8 billion euro ($12 billion) approach from U.S.
fund KKR aimed at taking Italy's biggest phone group
private, the company said on Sunday.
KKR's move comes as TIM's CEO Luigi Gubitosi battles for
survival after coming under fire from top investor Vivendi
following two profit warnings in three months.
TIM said KKR had set an indicative price of 0.505 euros for
its possible buyout offer -- a 45.7% premium to the ordinary
shares' closing price on Friday. KKR would also offer the same
price for TIM's savings shares.
The TIM board, chaired by former Bank of Italy official
Salvatore Rossi, met for several hours on Sunday afternoon but
in a short statement it gave no indication of whether it would
support the approach. It noted that KKR had termed its action as
"friendly" and aimed at winning the backing of the company and
of the government.
Italy's Treasury said foreign interest in Italian companies
was "positive news for the country" and the market would assess
how valid KKR's plan is were it to materialise.
The government will closely follow developments with a focus
on plans for TIM's fixed-line assets, which would be key in
determining whether it uses its veto powers.
Rome has special anti-takeover powers to shield companies
deemed of strategic importance from foreign bids.
A new owner would also have to assume TIM's 29 billion euro
gross debt.
CARVE OUT
Gubitosi brought KKR onboard last year in a 1.8 billion euro
deal that handed the New York-based fund a 37.5% stake in
FiberCop, the unit holding TIM's last-mile network connecting
street cabinets to people's homes.
KKR's plan would see TIM carve out its fixed network to be
run as a government-regulated asset along the model used by
energy grid company Terna or gas grid firm Snam
, two sources close to the matter said earlier on
Sunday.
The government wants any plans for TIM's grid to be in line
with the goal of rapidly completing broadband rollout across
Italy, supported by adequate investments, and protecting jobs,
the Treasury said in its statement.
Gubitosi has started looking at ways to squeeze money out of
TIM's assets, revisiting in particular a plan to merge TIM's
fixed-line grid - its most prized asset - with that of fibre
optic rival Open Fiber.
Sponsored by the previous government, that project had run
aground under Prime Minister Mario Draghi.
Rome, preparing to tap billions of euros of European Union
recovery funds to boost broadband connectivity in Italy, is
aware of the need to find a way to shore up the former telecoms
monopoly and protect its 42,500 domestic workers.
PRICE "TOO LOW"
Vivendi, which is pushing to replace Gubitosi, believes
KKR's offer does not adequately value TIM, a person close the
French media group said.
Vivendi, which faces a steep capital loss on its 24% TIM
stake after paying on average 1.071 euros a share, remains ready
to work alongside Italy's authorities and institutions for TIM's
long-term success, a spokesperson said.
Vivendi sees Gubitosi as a short-term solution for TIM,
people close to the matter have said. One person said on Sunday
KKR's plan may buy Gubitosi a few more months.
Private equity firms CVC and Advent have also studied
possible plans for TIM, working with former TIM CEO Marco
Patuano, now a senior adviser to Nomura in Italy.
A spokesperson for the two funds said they were open to
working with all stakeholders on a solution to strengthen TIM,
denying any contacts with Vivendi.
To oversee a strategic asset such as the fixed line, state
investor CDP has taken a 9.8% stake becoming TIM's
second-largest investor after Vivendi.
TIM's fixed network is also a key asset supporting the debt
burden which was cut further below the investment grade level by
credit rating agency S&P on Friday.
TIM's revenue have shrunk by a fifth over the past five
years hit by aggressive competition at home from rivals such as
Iliad, Vodafone, Wind Tre and Fastweb.
($1 = 0.8859 euros)
(Additional reporting by Agnieszka Flak in Milan and Giuseppe
Fonte in Rome; editing by Andrew Heavens, David Evans and Keith
Weir)
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