Telecom Italia board to back network spinoff: sources

MILAN (Reuters) - Telecom Italia SpA's <TLIT.MI> board is expected to give an initial nod to a plan to spin off its domestic fixed-line access network on Thursday, three sources familiar with the situation said.

"A go-ahead to a process that will lead to the separation of the fixed-line network into a new company is expected tomorrow," one source told Reuters.

The operation is expected to be opposed by Spain's Telefonica SA <TEF.MC>, the largest investor in Telco, the shell company that controls Telecom Italia. But this would not be enough to block a separation.

Telefonica does not want to create a precedent in its domestic market, a source said.

Telecom Italia has said its board would make a final decision on the spinoff on Thursday.

The move entails separating copper wires linking millions of users to the central switches as well 20,000 workers and a portion of the group's 28 billion euro debt into a new company.

"The spinoff is simply putting the network in a company that is 100 percent owned by Telecom Italia. Nothing changes. But selling the company remains to be seen," one source said.

Telecom Italia has said it could sell a minority stake in the network to state-owned fund Cassa Depositi e Prestiti (CDP).

Telecom Italia and CDP have been talking for months over a possible sale of a minority stake in the network but differences remain over governance issues and price.

Telco, which owns 22.4 percent of Telecom Italia, is controlled by Telefonica, insurer Generali SpA <GASI.MI> and banks Intesa Sanpaolo and Mediobanca SpA <MDBI.MI>.

(Reporting by Stefano Rebaudo and Stephen Jewkes; Editing by Lisa Jucca and Jeffrey Benkoe)