Telecom Italia CEO says talks with Open Fiber ongoing but 'there is always a plan B'

FILE PHOTO: Telecom Italia logo is seen at the headquarter in Rozzano neighbourhood of Milan, Italy, May 25, 2016. REUTERS/Stefano Rellandini/File Photo/File Photo

ROME (Reuters) - Discussions between Telecom Italia and Open Fiber to merge their fibre-optic assets are still ongoing but “in life there is always a plan B,” the chief executive of Italy’s biggest phone group said on Wednesday.

Telecom Italia has been talking since last June with Open Fiber's owners - utility Enel ENEI.MI and state lender Cassa Depositi e Prestiti - about ways to combine their fibre broadband operations.

Sources familiar with the matter have told Reuters a deal is proving difficult to hammer out and efforts by Telecom Italia to bring in investment funds to help it buy Enel’s stake in Open Fiber have stalled.

“Funds have shown an interest in investing, even at valuations that could appear aggressive”, CEO Luigi Gubitosi told an event organized by an association of small Telecom Italia investors when asked about negotiations with Open Fiber.

Telecom Italia in December asked infrastructure funds to evaluate an investment in a combined fibre-optic entity.

Big funds, including Ardian, Macquarie MAQ.AX, Wren House Infrastructure, Allianz ALVG.DE, Goldman Sachs GS.N, KKR KKR.N and Brookfield BAMa.TO tabled their non-binding bids before Christmas, a source with knowledge of the matter has told Reuters.

Gubitosi declined to answer when asked if Telecom Italia could consider setting up its own fibre optic company with some of the funds it had been in contact with.

“We have a capital markets day on March 11, let’s see what happens by that date and then we can talk about it,” he said.

Reporting by Elvira Pollina, writing by Valentina Za; Editing by Elaine Hardcastle