Telecom Italia’s board mandated the CEO Pietro Labriola to initiate an ameliorative negotiation with KKR of a binding offer for NetCo. According to the press, the offer could reach €23bn. TI’s current EV is €32.5bn. Valuing NetCo at €23bn derives an EV of only c.€2.5bn for ServiceCo (excluding Brazil). We believe €6-7bn should be more reasonable, which would imply a global EV of €36bn for Telecom Italia (corresponding to €0.42 per share). We maintain our opinion at Buy.