MILAN: Italy's biggest utility Enel made a formal offer on Thursday to buy fibre-optic company Metroweb, valuing it at 806 million euros ($903 million), three sources close to the matter said.
A high-speed Internet network is central to Prime Minister Matteo Renzi's reformist agenda.
State-controlled Enel wants to run fibre optic cables along its power network and having a foothold in Metroweb would help its cause because of the broadband firm's know-how.
Enel's plan could thwart a rival bid from Italian phone incumbent Telecom Italia which last week offered 820 million euros for Metroweb.
One of the sources said Enel would eventually be asked to raise its offer to 820 million euros to match Telecom's bid.
The source added Enel was the favoured bidder and was expected to meet the request. Metroweb -- controlled by state lender Cassa Depositi e Prestiti (CDP), through its CDP Equity division, and infrastructure fund F2i -- owns fibre-optic networks in the cities of Milan, Turin and Genoa. A second source said the Enel bid was expected to be part in cash and part in shares, but gave no further details.
Telecom Italia's offer is all cash.
The former telecoms monopolist, which in the last two years has invested some 4 billion euros in its broadband business, has its own plans to expand fast Internet coverage in Italy.
CDP, which controls Italy's gas and power grid companies Snam and Terna, is keen to tighten its grip on strategic networks there.
Renzi is looking to fast-track the roll out of superfast Internet to help modernise a stagnant economy, create jobs and enable businesses to compete globally.
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