UPDATE 2-Telecom Italia delays strategic board meeting
* Sept. 19 board meeting scrapped, new meeting on Oct. 3
* T.Italia buys time on strategic options-sources
* Telefonica may increase stake in Telecom Italia-sources
* Telecom Italia shares end down 0.8 pct (Recasts with confirmation from chairman)
By Stefano Rebaudo
TURIN, Italy, Sept 16 (Reuters) - Telecom Italia has delayed a crucial board meeting on strategic options to Oct. 3, Chairman Franco Bernabe said, a move that buys time to seek a new shareholder structure that could revive its fortunes after years of underperformance.
The meeting, initially set for Sept. 19, was expected to discuss a proposal by Spanish telecoms operator Telefonica to buy out Telecom Italia's core domestic shareholders.
"The Sept. 19 board has not been convened. We already had a board planned for Oct. 3 and have decided to meet on that date," Bernabe told reporters on the sideline of a conference in Turin.
Telecom Italia directors have so far rebuffed offers by Egyptian tycoon Naguib Sawiris and by Hong Kong-based conglomerate Hutchison Whampoa.
But management would welcome fresh cash to stave off a downgrade of its nearly 29 billion euro ($38.5 billion) debt to "junk" status and back investments needed to counteract declining margins in its Italian home market.
One source familiar with the situation said the board meeting had been postponed as Bernabe was not ready to discuss a new strategic proposal.
Telecom Italia is controlled by company holding Telco with a 22.4 percent stake.
Telefonica is the biggest shareholder in Telco, which also includes Italian banks Intesa Sanpaolo and Mediobanca , along with insurer Assicurazioni Generali.
Telco shareholders have up to Sept. 28 to decide whether to exit their shareholder pact and several had said they wanted to see the options on the table at the Sept. 19 meeting before taking any decision.
Telco shareholders took control of Telecom Italia in 2007 but the stock is trading at a fraction of the 2.8 euros per share they paid back then.
Shares in Telecom Italia closed down 0.8 percent at 0.6, underperforming a 1.1 percent rise in Milan's main FTSE MIB index.
A union official has also said Bernabe was poised to present an investment plan at this week's board meeting that could require a cash injection. The executive was also expected to outline proposals for a possible partner.
Even though Italy is struggling to emerge from a protracted economic crisis, Telecom Italia still enjoys a steady cash-flow in Italy as it owns the country's main fixed-line network.
The group is also profitable in South America, where it controls, among others, Brazilian unit Tim Participacoes SA .
While analysts expect Telecom Italia to be soon part of a merger wave that is sweeping across the telecoms sector, the current Italian shareholders are looking for an exit strategy for their loss-making investment in the Italian group. ($1 = 0.7542 euros) (Additional reporting by Robert Hetz in Madrid, Lisa Jucca, Paola Arosio and Danilo Masoni in Milan, Writing by Lisa Jucca; Editing by David Holmes and David Evans)