Shareholders to focus on Telecom Italia blueprint

MILAN, April 10 (Reuters) - Telecom Italia's (TLIT.MI) shareholders' assembly on Monday may reveal new investors and prompt the more vocal of them to demand changes to the business plan that new management presented last month.

Chief Executive Franco Bernabe's blueprint for Europe's fifth-biggest phone company was greeted by a sell-off that sent the stock to 10-year lows, and by public criticism from shareholders.

The Fossati family, which boosted its stake in Telecom Italia to 4.45 percent this year, has called for Bernabe to present a new plan by the third quarter.

"The Fossatis' arrival could bring in some fresh ideas," said Alessandro Frigerio, a fund manager at RMJ in Milan.

The family, which built its fortune in the Star food group, has also suggested Telecom Italia raise cash by converting the saving shares to ordinary shares at a premium. Saving shares carry no voting rights but receive higher dividends.

Making such shareholders convert to ordinary shares by paying a 30 euro cent premium for each one, for example, could raise 1.5 billion euros ($2.36 billion), a welcome boost for the heavily indebted company, Frigerio said.

"There would be a dilution for (controlling shareholder) Telco but it's a realistic plan," Frigerio said.

Telco, a holding company with a 24.5 percent stake, groups Spanish phone company Telefonica (TEF.MC), Italian banks Intesa Sanpaolo (ISP.MI) and Mediobanca (MDBI.MI), insurer Generali (GASI.MI) and holding company Sintonia.

MINORITY SHAREHOLDERS SPEAK OUT

Asati, an association of 2,200 small Telecom Italia shareholders with a 0.25 percent stake, also found Bernabe's plan lacking. It called for more investment in Telecom Italia's fibre optics network to offer innovative services.

The criticism comes as minority shareholders are becoming more vocal in Italy. Activist fund Algebris has criticised the performance of Generali, Europe's fourth-biggest insurer, and presented its own nominees to be Generali's auditors.

Bernabe wants to reverse years of falling profits and a shrinking international presence by cutting debt and expanding in countries including Brazil and Argentina.

He aims to improve the bottom line through industrial agreements with Telefonica and by expanding Telecom Italia's information technology sales in Italy.

When he presented his plan a month ago, Bernabe acknowledged he may revise it once he got to know the company better. He took over last December.

The assembly may reveal substantial changes in holdings and even new shareholders after Italian holding company Hopa sold its 3.7 percent stake last month.

Telecom Italia's shares plunged 40 percent in February and March before beginning to climb in April.

The shares rose more than 4 percent on Wednesday as traders cited talk of stakebuilding by a British fund, before closing 3 percent better at 1.5 euros, with volume almost double the 30-day average.

Shareholders have until Friday to declare how many shares in Telecom Italia they hold so they may use them to vote in Monday's assembly. (Reporting by Mathias Wildt; Editing by David Hulmes)