Swisscom's Fastweb to invest in Telecom Italia last-mile network - sources

MILAN (Reuters) - Fastweb, the Italian phone unit of Swisscom SCMN.S, is set to invest in the last-mile network Telecom Italia TLIT.MI is looking to develop with U.S. infrastructure fund KKR, two sources familiar with the matter said on Friday.

Under the agreement, Fastweb will transfer the 20% stake it has in its Flash Fiber joint venture with Telecom Italia (TIM) into the new venture, the sources said.

Fastweb will end up with a single digit percentage share in the new project dubbed FiberCop, one of the sources said.

Fastweb, TIM and KKR declined to comment.

TIM is currently in exclusive talks with KKR to sell 40% of its 7.5-billion-euro secondary network of fiber and copper cables that link street cabinets to people’s homes.

A binding offer by KKR is expected later this month, a source has previously said.

TIM sees the FiberCop project with KKR as a move that could lay the groundwork for a merger of its fiber assets with those of smaller rival Open Fiber.

TIM, whose second-biggest investor is state lender CDP, has been in talks for months over the idea of merging its fibre assets with those of Open Fiber.

But differences over issues including governance and regulation have thwarted efforts to clinch a deal.

The Italian government is keen to create a single broadband player to avoid duplication of investment.

Open Fiber, which is controlled by utility Enel ENEI.MI and CDP, already has a deal in place with Fastweb to offer it fiber access to a range of Italian cities.

Reporting by Elvira Pollina, writing by Stephen Jewkes, editing by Mark Potter