By Danilo Masoni
MILAN, Nov 7 (Reuters) - Telecom Italia's boardmembers were meeting on Thursday to approve a new plan to helprevive its business in their first gathering since Spain'sTelefonica struck a deal to tighten its grip on theItalian group.
Telecom Italia's board, controlled by Telco - an investmentvehicle that Telefonica agreed in September to progressivelytake over - is expected to look at ways to cut costs, slash its nearly 29 billion-euro ($39 billion) debt and return to growth.
New CEO Marco Patuano is expected to propose to the board acash injection of up to 2 billion euros, the sale of assets suchas the group's mobile towers in Italy or its Argentinian unit,and a dividend cut, sources familiar with the strategy said.
The sources said Telefonica was also considering the sale ofTelecom Italia's growing Brazilian unit, TIM, in2014, a plan opposed by Telecom Italia's second-largestinvestor, Marco Fossati, who has a stake of 5 percent.
The Italian businessman, who has been left out of the Telcodeal, flew to London on Wednesday to meet analysts and outlinehis plans for Telecom Italia. He called last month for ashareholder meeting to overhaul the group's board.
A decision on the sale of TIM, which is the second-biggestmobile carrier in Brazil behind Telefonica's own Vivo, will not,however, be made on Thursday.
Insiders in Madrid, Milan and London say Italian authoritiesare concerned Telefonica might exit Telecom Italia, one ofItaly's largest private sector employers, once the sale of theBrazilian crown jewel is completed.
Telecom Italia has struggled to grow in recent years becauseof its debt burden and an economic downturn at home in Italy.
Telecom Italia's credit rating was cut to junk status byMoody's earlier this month because of a failure to strengthenits balance sheet, making it more expensive to borrow money.
Since Telefonica and its Italian partners Generali, Intesa and Mediobanca bought intoTelecom Italia six years ago, the share price of the Italianfirm has fallen 70 percent and earnings declined by one quarter.
In August, Telecom Italia warned its profit would fallfaster this year than it had previously thought, hit by a pricewar for mobile phone services and the Italian recession. ($1 = 0.7392 euros) (Editing by Will Waterman)
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