MILAN: Telecom Italia (TIM) will stick to its plan to sell a minority stake in its last-mile grid even if a broader deal to create a single broadband network fails to materialise by the end of August, the head of Italy's biggest phone group said.

TIM postponed a decision over selling 37.5% of its secondary grid to US fund KKR after the government requested time to negotiate a merger of its network assets with smaller rival Open Fiber to create a single fast broadband network.

"We cannot guarantee there will be a deal (with Open Fiber)... but I think what you can try to do is an MoU which sets principles and timing for what should happen later," Chief Executive Luigi Gubitosi said on Wednesday in a conference call on results.

TIM has been in talks for months over a tie-up with Open Fiber, but issues regarding governance and regulation have so far stood in the way of a potential deal.

Gubitosi welcomed the government commitment to pursue the single network project but underlined that even if a comprehensive deal did not happen, TIM would pursue its plan with KKR.

"The KKR deal will happen anyway," he said, adding it was tailored as a potential "first step" in a much wider deal with Open Fiber.

Open Fiber, jointly controlled by state utility Enel and state lender Cassa Depositi e Prestiti (CDP), is a wholesale-only broadband unit. CDP also owns 10% of TIM.

Gubitosi said TIM wanted to keep a majority stake in any single combined entity with Open Fiber, but added that he was ready to negotiate on governance.

He said any single network would be available to other phone groups such as Vodafone or WindTre, which could also choose to invest in the operator itself.

Gubitosi said he was ready to include in any deal with Open Fiber the whole of the group's access network, going from central units to the people's homes, which analysts value at up to 15 billion euros ($17.8 billion).

TIM closed up 5%, while the European telecom sector was down 0.6%.