Telefonica's chairman to meet Italian PM on Tuesday: source

MADRID/ROME Mon Oct 28, 2013 11:37am EDT

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MADRID/ROME (Reuters) - The chairman of Telecom Italia's key investor Telefonica is to meet with Italian prime minister Enrico Letta on Tuesday, a source with knowledge of the matter said.

Last month the Spanish company reached a deal to gradually take over Telco, the investment vehicle owned by Telefonica and Italian financial interests which controls Telecom Italia with a stake of just 22.4 percent.

Telefonica declined to comment on Cesar Alierta's meeting with Letta, which comes a week before the board of Telecom Italia meets to approve new chief executive Marco Patuano's business plan.

The Italian government, which could not be reached for comment, is also expected to introduce a lower threshold for obligatory takeover bids sometime soon, a move that could complicate Telefonica's ambitions regarding Telecom Italia.

Earlier on Monday Letta met with Patuano, who told reporters afterwards that they had discussed the future of investments and jobs at his company.

The prospect of Telecom Italia falling under Telefonica's control has angered some Italian politicians and trade unions concerned about issues of national security, job losses and the pace of investment.

Sources close to the matter said on Friday Telecom Italia is considering scrapping its 2013 dividend and starting a reorganization of its Italian activities.

The heavily indebted group is also considering a rights issue and selling its Brazilian unit but its board is expected to take more time to decide on these options, the sources said.

(Reporting by Carlos Ruano and Alberto Sisto; Writing by Tracy Rucinski and Danilo Masoni; Editing by Greg Mahlich)

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