Telecom Italia backs subsea cable unit sale ahead of strategy update

Updates with context

By Elvira Pollina

MILAN, Feb 12 (Reuters) - Telecom Italia (TIM) TLIT.MI said on Wednesday its board of directors had approved a 700 million euro ($726 million) sale of its submarine cable unit Sparkle to a consortium led by Italy's Treasury.

TIM, which is due to report its 2024 earnings and update its strategy later on Wednesday, said it expects to complete the Sparkle sale by the first quarter of next year.

TIM Chief Executive Pietro Labriola told analysts in November that any cash raised from a disposal of Sparkle could help TIM to resume dividend payments, which TIM suspended in 2022.

Sparkle is deemed of strategic importance by Italian authorities, given its 600,000 kilometres of cable network, which transmits information between countries in Europe, the Mediterranean region and the Americas.

The Treasury jointly bid with Retelit, a fibre optic operator, which is controlled by Spanish fund Asterion.

The sale of Sparkle is part of a round of asset disposals aimed at reviving the former phone monopoly which has struggled with fierce price competition in its home market.

The complex turnaround is centred on the 18.8 billion euro sale of its prized fixed-line network TIM completed last year despite criticism from its main shareholder Vivendi VIV.PA, which has challenged the sale in courts.

TIM is now drawing interest from CVC Capital Partners, which is eyeing the purchase of Vivendi's 24% stake, and rival operator Iliad, as a bet on the consolidation widely seen as inevitable to prop up profit margins in the Italian telecoms sector.

State-backed conglomerate Poste Italiane PST.MI, which offers retail mobile and broadband services, is also considering a potential investment in TIM, sources have told Reuters.

($1 = 0.9642 euros)

(Reporting by Elvira Pollina, editing by Cristina Carlevaro and Keith Weir)

((elvira.pollina@thomsonreuters.com;))