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 [Rome] 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 (Hong Kong), 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)