MILAN: Telecom Italia has rejected a 3 billion euro ($3.9 billion) investment offer from Egyptian tycoon Naguib Sawiris and will take more time to consider the possible sale of a stake in its copper network.

The heavily indebted company said in a statement that its board had decided “not to proceed further” with regards to an expression of interest from Sawiris, who had proposed to invest capital to engineer a strategic turnaround.

After an eight-hour meeting of the group’s board, it asked management to further investigate a possible sale of a stake in its copper network to state fund Cassa Depositi e Prestiti (CDP).

The biggest obstacle to an agreement with the CDP appears to be the valuation of the network and the governance of the new company to be set up to manage the infrastructure, people familiar with the situation have said.

The company also said it wanted to continue negotiations with the two bidders for its loss-making television unit Telecom Italia Media to extract a better price.

In its statement, Telecom Italia did not mention any decision about a possible expansion in Brazil, a major source of growth in recent years. The company had looked at a possible purchase of Vivendi’s broadband unit GVT.

Sawiris was prepared to pay market prices - or around 0.70 euros per share - as part of a capital increase to help Telecom Italia pay down debt and bid for GVT. Telecom Italia’s top investors value their stakes on their books at 1.50 euros per share after several writedowns.

Shares in Telecom Italia fell 1.74 per cent to 0.7065 euros on Thursday before the announcement, underperforming a lower market, giving the company a market capitalisation of about 13.5 billion euros.

The stock has slumped 70 per cent since Spanish competitor Telefonica and Italian financial groups Mediobanca, Intesa Sanpaolo and Generali together bought a controlling 22.4 per cent stake in Telecom Italia in the spring of 2007.

After months of contacts between Telecom Italia and CDP, the board’s decision the fixed-line network, possibly worth up to 15 billion euros, marks the start of formal negotiations for a possible stake sale.

Reuters