ROME (Reuters) - The Italian government has given Abu Dhabi’s biggest sovereign fund a conditional green light to invest in Telecom Italia’s (TIM) last-mile network, three sources close to the matter told Reuters on Monday. The planned sale would give Abu Dhabi an indirect 10.3% stake in TIM’s last-mile grid, a fourth source said, in a deal worth about 500 million euros ($608 million). The Italian government has the power to block unwanted bids in industries deemed of strategic importance, such as telecoms, banking and health. TIM agreed in August to sell to U.S. investment firm KKR 37.5% of a newly created company, FiberCop, into which the telecoms firm is transferring its secondary “last-mile” network, which links so-called street cabinets to homes. Rome gave its green light to the deal in November, demanding that KKR commit to a government-sponsored plan to create a unified ultra-fast broadband network entitled to receive grants from the European Recovery Fund. The government wants TIM to put the rest of its landline network into FiberCop with the last-mile grid and then merge it with rival Open Fiber, which is jointly controlled by Italian utility Enel and state lender Cassa Depositi e Prestiti (CDP). CDP is also TIM’s second largest shareholder. Following the first clearance, KKR informed the Italian government of its intention to sell up to 30% of the unit that will hold its FiberCop stake to Infinity Investments, a subsidiary of the Abu Dhabi Investment Authority (ADIA). The cabinet approved the deal with conditions on Dec. 10, said the sources, who asked not to be named because of the sensitivity of the matter. They said the government had imposed conditions on the Abu Dhabi fund similar to those they’ve applied to KKR, without giving details, and that Infinity Investments would be an indirect and passive investor in TIM’s unit. ADIA, which is estimated to have $710 billion assets under management, only invests outside of the United Arab Emirates. The Italian prime minister’s office, ADIA and KKR all declined to comment.