* Intesa, Mediobanca join Generali in decision to exit Telco
* Move to make Telefonica biggest Telecom Italia investor
* Italian investors seen selling 7.4 stake gradually-source
* Telecom Italia shares fall 4 percent (Adds Intesa Sanpaolo statement on Telco exit, updates shares)
By Danilo Masoni
MILAN, June 16 Italian banks Intesa Sanpaolo and Mediobanca moved on Monday to leave the shareholder pact that controls Telecom Italia, following insurer Generali and making way for new investors in the phone company.
Intesa, Mediobanca and Generali formed holding company Telco in 2007 with Spain's Telefonica, aiming to fend off a takeover bid for Telecom Italia by U.S. group AT&T and Mexican tycoon Carlos Slim.
However, the Italian partners in Telco have recently signaled a desire to exit the unprofitable seven-year investment to focus on their core banking or insurance businesses.
"We have said that we don't want to be a telecoms operator," Intesa Sanpaolo's management board chairman, Gian Maria Gros-Pietro, told reporters on Monday at an event in Turin.
As the global telecoms industry undergoes a wave of consolidation, the stock being sold by the three Italian groups - which accounts for a combined 7.4 percent of Telecom Italia's share capital - could attract interest from potential predators.
However, a source familiar with the situation said the Italian firms were unlikely to sell to a rival of Telefonica and the shares would most likely be gradually sold on the market.
That would leave Telefonica as the largest investor in Telecom Italia, with a stake of almost 15 percent.
One interested player could be Egyptian tycoon Naguib Sawiris, who recently tied a possible 2 billion euros ($2.7 billion) investment in Telecom Italia to the withdrawal of Telefonica.
The buyer of the shares could be crucial as Telecom Italia Chief Executive Marco Patuano ponders the group's next steps in Brazil, where its TIM Participacoes unit competes with Telefonica.
Activist investor Amber Capital, which has a stake of less than 1 percent, has said Telecom Italia should reduce its exposure to Brazil.
The Italian firms are leaving Telco now because the pact provides two opportunities for them to do so - one between June 15 to June 30 and the other in February next year.
Telecom Italia shares, which hit a three-year high of 1.012 euros earlier this month on hopes it would benefit from industry consolidation, were down 4 percent at 0.95 euros by 1529 GMT.
Seven years ago when Telco was formed they traded as high as 2.475 euros, before the debt-laden Telecom Italia was hit by Italy's prolonged recession.
To sell their stakes in the 18 billion euro company, the Italian firms first need to exit the pact - a process that could take up to six months.
In separate statements, Intesa and Mediobanca said they had formally asked to exit Telco. Generali said last week its board had decided to exercise its exit option.
Intesa Sanpaolo has previously said it planned to sell its stake in Telecom Italia by 2017.