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Telecom Italia mulls mobile unit spinoff: sources

A man uses a Telecom Italia phone booth at a bus stop in Rome December 3, 2008. REUTERS/Chris Helgren
A man uses a Telecom Italia phone booth at a bus stop in Rome December 3, 2008. REUTERS/Chris Helgren

By Stefano Rebaudo and Alberto Sisto

MILAN (Reuters) - Telecom Italia is mulling spinning off its mobile unit along with its fixed-line network to bring new investors on board, three people, including a senior political source, told Reuters on Tuesday.

"The three-way split would allow the company to reduce debt and staff costs and favor the entry of new investors," the political source said. "It is a strategy that will allow the company to confront the market in the future more freely."

Later on Tuesday, the Italian phone company denied a break-up was under consideration.

"Telecom Italia points out that speculations about a possible break-up are groundless," a spokesman for the company said in an emailed statement.

While plans to spin off the fixed-line network have been on the debt-laden company's management agenda for months, the idea of stripping out the mobile unit would be a new development.

A fourth source with direct knowledge of the situation said the idea of a break-up was not on the agenda of Telecom Italia's board meeting on Thursday.

Telecom Italia's board will be meeting to decide on hiving off its fixed-line network assets in a newly created company, paving the way for a possible sale of a stake in the new firm. The assets have an estimated value of 12 billion to 15 billion euros ($15.5 billion to $19.3 billion).

Telecom Italia is also assessing a possible tie-up with Hutchison Whampoa, which would see the Hong Kong-based group's local mobile unit 3 Italia merging with the Italian group's mobile unit.

The break-up plan would envisage that Telecom Italia retain control of the two spun-off entities and keep control of its Brazilian unit TIM, the sources said.

(Additional reporting by Francesca Landini and Danilo Masoni; Editing by Dale Hudson)

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