April 23, 2016 / 1:20 PM / 3 years ago

Telecom Italia in talks to swap Sparkle stake for Metroweb: sources

A Telecom Italia tower is pictured in Rome, Italy, in this April 9 2016 file photo. REUTERS/Alessandro Bianchi/Files

MILAN/ROME (Reuters) - Telecom Italia (TLIT.MI) and state-lender CDP are in talks that may result in the Italian phone group buying fiber network firm Metroweb in exchange for a stake in its international wholesale unit Sparkle, two sources close to the matter said on Saturday.

Owning Metroweb, currently in the hands of CDP-controlled Fondo Strategico Italiano (FSI) and infrastructure fund F2i, would boost heavily-indebted Telecom Italia’s efforts to roll out ultrafast broadband across Italy.

It would also put it in a stronger position to rival utility Enel (ENEI.MI), which recently announced its own plans to help develop a national fibre-optic broadband network.

Telecom Italia and CDP did not comment, while F2i could not immediately be reached.

The sources gave no other details beyond saying that no accord had been reached yet and discussions were still ongoing.

Daily La Repubblica said earlier on Saturday that under a potential agreement Telecom Italia could first buy F2i’s 54 percent stake in Metroweb in cash and then get the remaining stake held by FSI in exchange for a 25 percent stake in its fully-owned Sparkle unit.

Sparkle, which owns and manages fiber cables that stretch over 570,000 km, is deemed strategic because its submarine network transmits information between countries in Europe, the Mediterranean and the Americas.

Having a slice of Sparkle would help Rome to prevent it from falling into foreign hands, especially given the growing influence of French media group Vivendi (VIV.PA), which in less than a year has become Telecom Italia’s top investor with a 24.9 percent stake.

Metroweb, at the heart of Prime Minister Matteo Renzi’s efforts to bring ultrafast Internet to Italian homes and businesses to help Italy’s flagging economy, has been in parallel tie-up talks with both Enel and Telecom Italia. A deal with one of the parties was expected to be clinched this month, other sources have said.

Reporting by Agnieszka Flak and Stefano Bernabei, editing by David Evans

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