Italy's government said this week it would seek to find by the end of this year "the best market-friendly options" for struggling TIM, placing a planned bid for the phone group's grid by state lender CDP on hold.
"Talking about a full takeover is pure fantasy," cabinet undersecretary Alessio Butti said at a business event in Rome, referring to recent press reports on his plans for TIM.
Asked for clarification on the sidelines of the event, Butti, who oversees the government's strategy on broadband, reiterated that the government's goal was securing control of TIM's grid, adding it still needed to define how to do it.
In a statement late on Wednesday, TIM said it remained open to discussions with the government over plans for its network, adding it would also press ahead with a strategy centred on asset spinoffs to cut debt.
Italy wants to improve the speed and reach of broadband services across the country, while also seeking to help get debt-laden TIM, which employs more than 40,000 people, on a more sustainable footing.
CDP, Macquarie Asset Management and Open Fiber earlier confirmed they would not submit a bid for TIM's network grid by the deadline scheduled on Wednesday.
Championed by the previous government of Prime Minister Mario Draghi, 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 broadband champion under CDP's control.
(Reporting by Giuseppe Fonte and Elvira PollinaEditing by Cristina Carlevaro, Keith Weir and Mark Potter)
By Giuseppe Fonte and Elvira Pollina
