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ROME/MILAN, July 15 (Reuters) - Italian phone companyTelecom Italia could halt its plan to spin off itsfixed-line network, a source familiar with the matter said onMonday, as a row over tariffs with the local regulator heats up.
A failure for the spin-off project would be another setbackfor Chairman Franco Bernabe's efforts to revive the debt-ladengroup, following the collapse earlier this month of tie-up talkswith Hutchison Whampoa.
Last Thursday regulator AGCOM approved lower fees for rivalsto rent space on Telecom Italia's fixed-line copper network,sparking criticism from the former monopoly and praise fromcompetitors like mobile carrier Vodafone that does not own fixedlines.
Telecom Italia has said the fee cut jeopardises the plannedspin-off of the network and would reduce its annual income by110 million euros ($144 million).
Lower line rental charges would diminish the value of theTelecom Italia's fixed network, making the new company to bespun off potentially less attractive to outside investors.Italy's state-backed investment arm, the CDP, has been in talkswith Telecom Italia for months over taking a stake in thenetwork company.
Telecom Italia will hold an extraordinary board meeting inRome in late afternoon to assess the situation.
"On the table are more options including a possible halt tothe project," the source said.
Telecom Italia could not be reached for comment.
Telecom Italia's board approved in May a plan to separatefixed-line access assets into a new company, a move that couldfree up resources to cut its more than 28 billion euros of debt.
AGCOM plans to reduce the so-called LLU (local loopunbundling) fees by 6.5 percent to 8.68 euros ahead of a broaderregulatory review for the three years to 2016.
The ruling will be reviewed by European authorities andAGCOM will take a final decision well before the end of 2013.
Shares in Telecom Italia closed up 0.1 percent at 0.503euros.
