MILAN Telecom Italia (TLIT.MI) said on Thursday any offer for TIM Brasil (TIMP3.SA) should be evaluated by independent directors, which could complicate the sale of the prized Brazilian unit.
Wireless carrier TIM Brazil is Telecom Italia's main source of growth but has become the focus of a shareholder dispute over how the Italian telecoms group should cut debt and fund much-needed domestic investment.
In a statement, Telecom Italia said any extraordinary operation regarding its stake in the Brazilian company would follow "related party procedures", which require a review by a committee of independent board members.
Telecom Italia said no plans or talks were underway to sell TIM Brasil nor had it received any offer for the unit.
Spain's Telefonica (TEF.MC) controls Telecom Italia together with three Italian financial institutions with a 22.4 percent stake held through investment vehicle Telco.
Sources close to the matter have said Telefonica is looking to break up TIM Brasil and divide its assets between itself and the other two mobile operators in Brazil to solve its own antitrust problems in the growing south American country.
Telecom Italia and Telefonica are direct competitors in Brazil, and rebel investor Marco Fossati says this conflict of interest could force Chief Executive Marco Patuano to take decisions favoring the Spanish telecoms giant.
Thursday's decision means any sale of TIM Brasil could eventually need approval at a special shareholders' meeting where Telefonica, if identified as a related party, would be left out of the vote.
On the other hand, the independent directors' review could shield Telecom Italia from accusations of conflict of interest.
The possibility of a sale was sparked by antitrust issues resulting from Telefonica raising its indirect stake in Telecom Italia to almost 15 percent in a deal that allows it to gradually take over the Italian company.
Telecom Italia said it would continue to discuss governance matters at another board meeting on February 6.
A sale of TIM Brasil is not part of Patuano's business plan, though speculation about an offer for the business has lifted Telecom Italia shares 18 percent this month. The stock closed up 1.2 percent on Thursday, against a 0.85 percent fall in Milan's blue-chip index .FTMIB.
(Reporting by Danilo Masoni and Stefano Rebaudo; Editing by Pravin Char)