By Foo Yun Chee and Elvira Pollina
BRUSSELS/ROME (Reuters) - European Union antitrust regulators are asking rivals and customers whether proposed acquisition of Telecom Italia (BIT:TLIT)'s (TIM) fixed-line access network by U.S. investment firm KKR could hamper Italy's wholesale market, people familiar with the matter said on Tuesday.
Such regulatory worries could lead to a lengthy investigation of the deal and put pressure on KKR to offer significant remedies. Rivals have cited the risks of price hikes once the deal is completed.
KKR is buying TIM's domestic network for up to 22 billion euros ($23.5 billion) in a deal that would make the Italian telecoms group the first in a major European country to divest its landline grid.
TIM's landline network, or NetCo, covers nearly 89% of the country's households and its fibre and copper cables stretch over 23 million km (14.3 million miles) across the country. The sale is part of a government-backed plan aimed at cutting debt and reviving the group.
KKR last week sought EU antitrust approval for the deal, prompting the EU competition enforcer to send questionnaires to rivals and customers on Monday asking for feedback.
Respondents have until April 30 to reply to the 49-page document with 79 questions.
The document indicates that the European Commission has concerns about the viability of wholesale competition in Italy, the people said.
The Commission and KKR declined to comment.
The EU watchdog also had concerns whether the agreement between the two companies put at risk competition in Italy and also the risks of coordination in the market between NetCo and rival OpenFiber, which is controlled by Italian state lender CDP and Australian investment group Macquarie, they said.
The questionnaire also asked about the impact of the deal on business users, the people said. The Italian government plans to take 20% in NetCo to oversee an asset deemed of strategic importance.
TIM last week said it was on track to finalise the deal this summer. The Commission is scheduled to decide on the deal by May 30.
($1 = 0.9348 euros)