MILAN, Dec 9 Reuters Telecom Italia TIM is exploring investors39; interest in buying into its assets, sources familiar with the matter said on Friday, as officials within Italy39;s rightwing government seek agreement on how to fix the debtcrippled company39;s woes.

Italy39;s government last month said it would seek to identify the best marketfriendly options by the end of the year for struggling TIM, placing a planned bid for the phone group39;s grid by state lender CDP on hold.

The mooted multibillion deal, part of a wider project to create a unified Italian network company with CDP39;s broadband unit Open Fiber, was a focal point of CEO Pietro Labriola39;s strategy to break up TIM into several units and cut its 25 billion euros 26.4 billion debt pile.

Labriola is looking to prepare for any outcome of talks within the government. The executive has been working in particular with U.S. fund KKR recently, three sources familiar with the matter told Reuters.

The U.S. fund, which already owns a stake in TIM39; lastmile network and had an attempt to take over TIM as a whole rejected this year, has recently renewed its interest in tightening its grip on TIM39;s landline grid, the sources said.

TIM has also had contacts with other potential investors interested in buying into its domestic service operations, including French telecoms group Iliad and Poste Italiane, the people said.

Any deal involving foreign investors and TIM assets will be subject to government scrutiny…