MILAN, Nov 29 (Reuters) - Italy's government said it would seek to find by the end of this year "the best market-friendly options" for struggling Telecom Italia (TIM) (TLIT.MI), signaling a planned bid for the phone group's grid by state lender CDP has been put on hold.
Championed by the previous government of Mario Draghi and due by this Wednesday, the offer was part of a broader project to combine TIM's network assets with those of smaller rival Open Fiber to create a national champion under CDP's control.
Such a plan met heavy reservations within Giorgia Meloni's new right-wing administration, which decided to put CDP's bid on hold on Monday night, two government officials told Reuters.
TIM shares were 2% lower by 1330 GMT, underperforming Italy's flat blue chip index (.FTMIB)
In a statement on Tuesday, Industry Minister Adolfo Urso and cabinet undersecretary Alessio Butti said Rome aims to kick off talks to set out by Dec. 31 the "best viable market solutions" in the interests of the country, the companies and their shareholders and stakeholders.
View 2 more stories
TIM, which has been under pressure for years due to a hyper-competitive domestic market, had no immediate comment.
CDP controls Open Fiber and is TIM's second largest investor behind French media giant Vivendi (VIV.PA).
The government move will force TIM CEO Pietro Labriola to rejig his plans to revamp the battered company as the sale of its infrastructure was a pillar of a break-up strategy to cut the company's 25 billion euro debt pile.
However, CDP's bid for TIM's grid stumbled over valuation issues as Vivendi demanded 31 billion euros to back a sale, at least 10 billion euros above the state lender's price tag, sources have said.
Vivendi has recently also been critical of TIM's governance setup and clashed with chairman Salvatore Rossi on a number of occasions.
The fresh uncertainty over its future is hitting TIM at a time when rising rates increase the drain on the group's cash flow from interest payments.
Economy Minister Giancarlo Giorgetti this month said Butti's plans required extensive discussions within the government, which had "several options" to secure control of TIM's network.
Butti, who has openly criticised CDP's plans for TIM, has called on the Treasury-owned lender to take over TIM in full to then sell its service operations, including its Brazil-listed unit.
TIM is expected to hold a board meeting on Wednesday to discuss the appointment of a director to replace Renault boss Luca de Meo.
Our Standards: The Thomson Reuters Trust Principles.