MILAN, Oct 15 (Reuters) – U.S. fund KKR (KKR.N) has submitted a binding bid for Telecom Italia’s (TLIT.MI) domestic network grid but will need more time to finalise its approach for the group’s smaller submarine unit Sparkle, Italy’s biggest phone group said on Monday.

A deal with KKR for the sale of its main asset is the centrepiece of Telecom Italia (TIM) CEO Pietro Labriola’s strategy to reshape the group, burdened with 26 billion euros ($27.4 billion) of net debt, as part of a .

TIM did not provide any details about the fund proposal, adding its directors will review it once a preliminary analysis has been completed.

TIM’s shares fell as much as 4%, underperforming Italy’s blue chip index (.FTMIB), with a Milan-based trader citing a lack of clarity on terms of the offer for the decline.

The binding offer for TIM’s fixed access network is valid until Nov. 8, with the possibility to extend it further until Dec. 20, the former phone monopoly said.

TIM said KKR has also presented a new non-binding bid for its Sparkle business, for which the U.S fund plans to submit a final bid within four to eight weeks, once due diligence is completed.

Sources have previously said that Italy’s government wants ultimately to take full ownership of Sparkle, which analysts value at below 1 billion euro, as part of an agreement with KKR.

Sparkle’s cable network stretches over 600,000 km and it has a direct presence in 32 countries.

COMPLEX VALUATION

KKR’s approach valued TIM’s fixed access network and Sparkle combined in excess of 23 billion euros, a source familiar with the matter told Reuters on Sunday.

That total includes some 10 billion euros of debt and a future potential payment worth more than 2 billion euros linked to a combination of TIM’s fixed access grid with state-backed rival Open Fiber.

Telecom Italia and KKR declined to comment on the matter.

The position of Vivendi (VIV.PA), TIM’s top shareholder, could be pivotal in deciding the fate of the bid.

The French media group has previously pushed for a higher valuation and questioned the sustainability of the rump services business that will be left behind.

($1 = 0.9496 euros)

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