Telecom Italia shares drop 2.5 pct as regulator proposes fees cut

MILAN, July 12 Fri Jul 12, 2013 3:53am EDT

MILAN, July 12 (Reuters) - Shares in Telecom Italia fell more than 2.5 percent in morning trade on Friday after the regulator tentatively approved lower fees for rivals to use its fixed-line copper network.

The decision by AGCOM sparked criticism from the Italian phone company which said the cut would put at risk the planned spin-off of its fixed-line access network and reduce its results by 110 million euros ($143 million).

"The most worrisome element is represented by possible repercussions on the network separation plan," ICBPI analyst Stefano Vulpiani said in a note.

The spin-off would allow Telecom Italia to sell a stake in the newly created network company, valued at 12-15 billion euros, and raise cash to cut debt and fund investment.

($1 = 0.7668 euros) (Reporting by Danilo Masoni, editing by Stephen Jewkes)