© Reuters. FILE PHOTO: Telecom Italia’s new logo of its TIM brand seen on a screen during the launch in Rome

By Giselda Vagnoni

ROME (Reuters) – Telecom Italia (TIM) (MI:) has suffered a setback in its plan to assuage pressures for a separation of its prized network assets by placing them into a wholly owned subsidiary, as the industry regulator said it was opposed to the proposal.

TIM has been under pressure for years from Italian politicians, regulators and rivals to separate and upgrade its network, which analysts have valued at up to 15 billion euros ($17 billion).

Before being ousted in November former TIM chief Amos Genish set out a plan to spin off the network into a fully controlled separate company, but communications regulator AGCOM has given an initial thumbs down to the idea since TIM would continue to have significant power in the market.

In a document published on its website the watchdog said it was launching a 45-day public consultation on the plan, results of which would help it draw up a final decision in coming months.

A spokesman for TIM declined comment.

Italy’s biggest phone group gives rivals such as Vodafone (L:), Wind and Fastweb (S:) access to its network infrastructure, but also competes with them when it sells its own telecom services to customers.

AGCOM said that under TIM’s plan, by keeping control of the new company it would be in the position of being able to favor its own companies to the detriment of competitors.

Pressure on TIM to spin off its fixed access network intensified after French media group Vivendi (PA:), the Italian phone group’s biggest shareholder with a 24 percent stake, named Genish at the helm of the group in September 2017 and began to exert greater influence, which upset the Italian government.

Since coming to power in June the government has placed the creation of a fast broadband network at the heart of its industrial policy and is drafting measures to help create one single network player for the country, which could combine TIM’s network with that of smaller rival Open Fiber.

TIM has also been caught since early last year in a battle between Vivendi and U.S. activist fund Elliott over how to revive the Italian company, which is saddled with 25 billion euros of debt.

TIM appointed Luigi Gubitosi as chief executive in November.

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