** Deutsche Bank cuts Italy's Telecom Italia TLIT.MI to "sell" from "hold", saying shares could underperform as bid deadline from KKR KKR.N for its landline grid approaches
** The company's board backed KKR's request to extend to Oct. 15 a deadline to receive a binding bid from the U.S. fund for its landline grid, dubbed NetCo, which KKR preliminary values at around 23 billion euros ($24.22 billion)
** DB analyst Keval Khiroya that while the prospect of a NetCo deal has supported the shares, the market could "reflect on a weak domestic ServeCo (service company) with a premium valuation," referring to Telecom Italia's business post sale
** The analyst also flags that investors would to wait for regulatory clearance on the deal
** "If the deal fails to materialise, TI (Telecom Italia) would remain exposed to a weak organic story of high leverage and equity free cash flow losses until 2027," the analyst says
** DB also cuts its target price on the stock by 23% to 0.23 euros
($1 = 0.9496 euros)
(Reporting by Alberto Chiumento)