By Dhirendra Tripathi

Investing.com – Trading in Telecom Italia (MI:TLIT) stock was up 27% by mid-session in Milan on Monday, after a friendly $12-billion offer from private equity giant KKR (NYSE:KKR).

The offer for Italy’s biggest phone company fueled a surge in the share prices of other European telcos, many of which trade at depressed valuations due to their limited profitability and heavy investment needs due to the rollout of 5G. BT in London (LON:BT) and KPN in Amsterdam (AS:KPN) were up around 3% each. ADRs of Vodafone (NASDAQ:VOD), Europe’s largest telecom operator, were up around 2%.

KKR has offered 50.5 euro cents per share, giving the company an enterprise value of 33 billion euro (around $37 billion). The stock currently trades at 44 cents. The non-binding offer is conditional on the government's backing and the outcome of a four-week due diligence analysis.

Italy's government has the power to block unwanted foreign interest in strategic companies. The country's s Treasury said on Sunday that the decision on whether to use those powers would hinge on plans for the network.

Those powers have principally acted as a brake on the ambition of France's Vivendi (OTC:VIVHY), which has accumulated a 24% stake in the company, albeit at a level more than twice what KKR is now offering.

The Italian firm has issued two profit warnings in three months, prompting Vivendi to push to replace Chief Executive Luigi Gubitosi.

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Factbox-Telecom Italia's main assets and operations