The Treasury is due to guarantee a €2 billion credit line for Telecom Italia (TIM) to bolster the turnaround efforts of the country’s largest telecommunications services provider.

The funding would boost the company’s finances as it focuses on a plan to revamp the group, cantered around separating its wholesale fixed network operations from services businesses.

An agreement was reached to reduce the financing from an initial €3 billion due to a decline in TIM’s financial requirements.

Following a short-term easing in EU rules on state aid, the Italian credit export agency SACE can provide guarantees of up to 80% of loans given to businesses struggling with pandemic-fuelled difficulties.

The scheme will be in operation until the end of this month and has permitted SACE to offer guarantees of €36 billion in bank loans to large businesses throughout the country, as per Treasury data.

According to sources close to the matter, Italy’s Economy Minister Daniele Franco was due to sign the decree giving Telecom Italia the funding this week. A group of banks will provide the loan, including Italy’s UniCredit and France’s BNP Paribas.

The government will guarantee 80% of the total.

It was reported by Reuters news agency last month that the SACE board cleared the state guarantee on 10th May.

In addition, a sale is being contemplated of Telecom Italia’s domestic landline grid and international cable unit, Sparkle within the overhaul of the business.

Moreover, a possible deal with government lender Cassa Depositi and Prestiti (CDP) is under discussion, after reaching an initial agreement in May to set up a unified broadband leader in Italy, combining the network assets of Telecom Italia and CDP-controlled rival Open Fiber, the Reuters report adds.