November 28, 2016 / 3:36 PM / 9 months ago

UPDATE 2-EDF's Edison says could buy Eni's Italian energy retail business

* EDF unit Edison wants to triple its Italian retail base

* Says liberalisation is opportunity to win market share

* Hopes to buy oil major Eni's retail clients base

* Wants to become number one wind operator in Italy (Adds CEO's comments about opportunities in Italian market)

By Geert De Clercq

PARIS, Nov 28 (Reuters) - Italian energy group Edison , a division of French utility EDF, wants to triple the size of its domestic electricity and gas retail business as the market is opened up to more competition, and is interested in buying oil company Eni's retail business, its CEO said on Monday.

Eni wants to sell its portfolio of some 8 million Italian gas and power retail supply accounts as part of a plan to repay debt and fund major oil and gas projects. This $3.4 billion sale has been delayed due to political uncertainty linked to Italy's Dec. 4 referendum on democratic reform.

"Eni has expressed a desire to step out of retail. We are ready to respond to this and will be active if a sale is initiated," Edison's chief executive Marc Benayoun told reporters.

Benayoun estimated that Eni's client base was worth "a few billion euros" but said no talks had yet started with Eni, which would only decide how much of the business it wanted to sell by the end of March.

Benayoun said that if a deal with Eni materialised, EDF - which owns 99.48 percent of Edison - would be ready to sell a 20-35 percent stake in Edison to a long-term Italian investor in order to help finance the operation.

He said EDF could also sell some of its own shares in Edison on the stock market but would keep a majority stake.

With a 7 percent market share, Edison is the third biggest power producer in Italy after market leader Enel, which has a 26 percent share, and Eni. It is also the third biggest gas wholesaler with a 6 percent share, compared with market leader Eni's 83.3 percent.

But in energy retailing in Italy Edison remains small, with just 1.2 million customers, making it the sixth biggest retail supplier behind Enel, the biggest with nearly 32 million customers, Eni and three regional Italian utilities.

Benayoun said Edison wanted to increase its customer base to 3-4 million.

"With just 1.2 million customers one can barely survive. We need at least 3 million to win economies of scale," he said.

Edison will try to win more business with new marketing promotions, such as offering to pay new customers' television viewing tax, which is integrated in utility bills in Italy, and by making acquisitions.

Benayoun said that from 2018, when Italian retail energy customers will be able to chose their supplier, lots of smaller retailers who now sell energy under regulated tariffs may want to sell and Edison would be ready to buy.

A deal with Eni - which has 7.9 million customers, 5.9 million of which take gas and 2 million electricity - could move Edison up the rankings. But it would not necessarily buy the entire portfolio as the gas retailing business would be more easily integrated than the electricity portfolio.

WIND POWER

Benayoun also said Edison wanted to boost the share of renewables in its generation portfolio to about 40 percent from the current 20-25 percent.

Edison has launched a 107 million euro ($120 million) bid for Italian wind farm operator Alerion which closes this week.

Alerion has an installed capacity of 260 megawatts (MW) which, combined with Edison unit E2i's 590 MW, would make Edison Italy's second-biggest wind power generator behind ERG.

Italy's 9,000 MW of wind power is fragmented, with only ERG operating more than 1,000 MW of capacity.

Benayoun said Edison was also considering another acquisition and hopes to win tenders for 80 to 100 MW of new capacity. This, combined with the E2i and Alerion capacities and the 260 MW that EDF unit EDF Energies Nouvelles operates in Italy would give Edison a total capacity of more than 1,000 MW.

"With Alerion, the tenders, the consolidation of EDF EN and the potential of another takeover, we could become the number one wind player in Italy by the end of 2017," Benayoun said.

Benayoun also said Edison could return to profitability in 2018. He expects the company to come close to break-even in 2017 and to book a small net loss this year.

Benayoun - who is also head of EDF's gas business - estimates EDF's oil and gas exploration assets are worth about 1 to 1.5 billion euros.

He said that after expanding in several countries, EDF would now focus its investments on Italy and Egypt and plans to sell its British and Norwegian oil and gas interests. (Editing by Ruth Pitchford, Greg Mahlich)

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