(Repeats Aug. 30 story with no changes)
* TIM to sign off on KKR last-mile stake sale on Monday
* KKR deal is launch pad for govt-backed single network
* State to have final say on single network strategic issues
By Stephen Jewkes, Elvira Pollina and Giuseppe Fonte
MILAN/ROME, Aug 30 (Reuters) - Telecom Italia (TIM) is set to sign off on a landmark deal with U.S. fund KKR on Monday that could lay the groundwork for plans to create a single ultrafast broadband network promoted by the Italian government.
Rome is keen to create a single full-fibre network to close Italy's digital divide with other European countries and wants TIM to merge assets with smaller state-backed rival Open Fiber to create a national champion eligible for grants from Europe's Recovery Fund.
Earlier this month, TIM postponed to Aug. 31 a decision to sell 37.5% of its last-mile grid, FiberCop, to KKR for 1.8 billion euros ($2.1 billion) after the government asked for more time to broker the broad network agreement roping in Open Fiber.
But on Thursday the ruling coalition gave the go ahead to a Memorandum of Understanding setting out a road map for the creation of a high speed broadband network open equally to all operators and, crucially, acceptable to regulators.
"The last-mile deal with KKR is the launching pad for the much bigger deal further down the road," said a source involved in the process.
Industry Minister Stefano Patuanelli said on Saturday such an infrastructure could be eligible for 6 billion euros of EU Recovery Fund money.
TIM and Open Fiber have been talking for over a year about ways of combining their assets, but negotiations have foundered on governance and regulation.
Former phone monopolist TIM wants majority control of any single network while Open Fiber insists it should be wholesale only and not under the control of an incumbent with a big retail business like TIM.
Under the government plan, TIM could initially own more than 50% but will not have a majority of board members and the final say on strategic issues will lie with state-lender CDP.
All market players should have equal access to the unified broadband network and its ownership structure should be open to newcomers, sources said.
CDP, which jointly controls Open Fiber with utility Enel , is TIM's second-biggest shareholder after Vivendi . It controls Italy's gas and power grids Snam and Terna.
Besides the deal with KKR, TIM's board on Monday will give its backing to the government's MoU, sources said, while TIM, KKR and CDP are set to negotiate an option for CDP to enter FiberCop capital.
At a later stage, and subject to prior regulatory clearance, the plan is to merge FiberCop and Open Fiber. TIM would then fold its primary network, connecting switching centres to street cabinets, into FiberCop, giving the new player the entire fixed-access network.
A source said CDP had also called a board on Monday to endorse the blueprint.
Enel is not expected to sign the MoU but sources said its CEO was onside with government plans.
The state-controlled utility will sell part of its stake to CDP to guarantee state control and can then sell the rest to whoever, a source close to the matter said.
Infrastructure fund Macquarie has already made a non-binding bid for all or part of Enel's stake in Open Fiber valuing the whole group at almost 8 billion euros including debt. It is expected to table a binding offer in September, sources said. ($1 = 0.8401 euros) (Reporting by Stephen Jewkes, Elvira Pollina and Giuseppe Fonte; editing by David Evans)