Poste open to exploring Telecom Italia tie-up with Iliad, sources say

By Elvira Pollina and Giuseppe Fonte

MILAN (Reuters) - Poste is open to discussions with Iliad over any potential tie-up between the French telecoms firm and Telecom Italia (TIM), three sources familiar with the matter said, in a move to consolidate Italy's telecoms sector.

Financial conglomerate Poste is set to become TIM's single largest investor with a 24.8% stake after it agreed to buy an additional 15% holding from France's Vivendi.

State-controlled Poste, whose businesses include energy, payments and phone services as well as mail and parcels, first became an investor in TIM in February with a 9.8% stake, replacing state lender Cassa Depositi e Prestiti (CDP).

In announcing its further stake increase, Poste said it would play the role of long-term industrial partner at TIM, favouring synergies between Poste and TIM's businesses, as well as promoting the consolidation of Italy's telecoms sector.

While no formal steps have been undertaken yet, Poste is open to exploring a potential tie-up between Telecom Italia and Iliad, the people said, asking not to be named.

Iliad's entry into Italy six years ago spurred aggressive price competition in the retail telecoms market, especially in the mobile segment. Experts say that profit margins in the sector are too thin to finance the required investments.

Any tie-up between Iliad, majority-owned by French billionaire Xavier Niel, and TIM would reduce the number of mobile network operators in Italy to three from four, and would need antitrust approval.

Iliad, which has been pushing for consolidation in Italy, had approached the government about TIM, but Rome put any talk about a potential combination on hold, as Poste's investment took precedence, Reuters reported in February.

In order for Italy to preserve a meaningful presence in TIM should it tie up with another telecoms firm, Poste first needed to boost its stake, sources had said before the stake increase was made official.

(Reporting by Elvira Pollina and Giuseppe Fonte; Editing by Keith Weir)