MILAN, Oct 13 Reuters U.S. fund KKR is preparing to submit a multibillion euro bid for Telecom Italia39;s TIM landline grid by a deadline on Sunday as part of a governmentbacked plan to reshape the former phone monopoly, people familiar with the matter said.

A deal with KKR is the centrepiece of TIM CEO Pietro Labriola39;s strategy to reshape the group, burdened with 26 billion euros 27.6 billion of net debt, and to allow a fresh start for the remaining services business which has been hard hit by price competition in its home market.

The final bid is expected to be broadly in line with KKR39;s preliminary offer, valuing Netco a venture comprising TIM39;s fixed access network and submarine cable unit Sparkle in the region of 23 billion euros when including some variable components, the sources said.

That total will likely include about 10 billion euros of debt and a payment of up to 2 billion euros linked to a potential future combination with statebacked fibreoptic operator Open Fiber, according to the sources.

KKR39;s offer envisages NetCo absorbing about a half of TIM39;s 40,000 domestic workforce, in line with plans previously outlined by the company, the sources added.

The sale has effectively been endorsed by Prime Minister Giorgia Meloni39;s rightwing administration which authorised the Treasury to join KKR39;s bid for TIM39;s grid, an asset deemed of strategic national interest.

The Treasury plans to take a stake of 1520 in the NetCo business for a total…