* Decision could be taken by board on Nov. 7 - sources
* Italy's PM expected to meet head of top investor
MILAN Oct 22 Telecom Italia is set to
shelve a plan to separate its domestic fixed-line phone network
while key shareholder Telefonica decides whether or not
to increase its voting stake, people familiar with the matter
Last month Telefonica reached an agreement allowing it from
next year to gradually take over Telco, the investment vehicle
for a consortium of Italian financial companies and Telefonica
which holds a 22.4 percent controlling stake in Telecom Italia.
"It is not a mystery that Telefonica is against selling part
of the network. The issue will remain on hold until the issue of
Telefonica's stake in Telecom Italia is resolved," one of the
The spin-off project envisages putting the network assets,
worth an estimated 13-15 billion euros ($17.8-20.5 billion) into
a separate company with a view to selling a minority stake in it
to state-backed fund Cassa Depositi e Prestiti (CDP).
The board of Telecom Italia approved the separation plan in
May, a move that could free up resources to cut its more than 28
billion euros of debt and fund investments.
But now management intends to propose at a Nov. 7 board
meeting that the plan be dropped, one of the sources said. On
that day board directors are expected to discuss a new business
plan and approve the company's quarterly data.
Another source said Telecom Italia could opt instead to put
the network assets in a separate division, a model adopted by
British Telecom with its network unit Openreach.
Telecom Italia did not respond to a request for comment.
The possibility that Telecom Italia could review plans
regarding the network had already been indicated two weeks ago
by the company's new chief executive Marco Patuano during a
meeting with trade unions.
Meanwhile, reports in the Italian press said Telefonica's
chairman Cesar Alierta could meet Italy's Prime Minister Enrico
Letta shortly to discuss the situation.
When Telecom Italia's board approved the spin-off plan in
May, the two representatives for the Spanish group abstained.
Shares in Telecom Italia last traded before the close on
Tuesday down 1.2 percent at 0.7260 euros.