* Chairman, committee of four directors to assess dealproposal-sources
* Formal negotiations have not started-sources
* Telco shareholders divided - sources
* Shares up 1.7 pct
By Lisa Jucca and Danilo Masoni
MILAN, April 11 (Reuters) - Telecom Italia hasappointed a panel of directors to consider a proposed tie-upwith Hutchison Whampoa which would make the Hong Konggroup Telecom Italia's top shareholder in return for mergingtheir local mobile businesses.
After a six-hour board meeting Telecom Italia issued astatement on Thursday saying it has asked its chairman FrancoBernabe and four other board members to examine Hutchison'sproposal "in a short period of time" and see whether it is inits interest to pursue negotiations.
According to sources familiar with the situation Hutchisonwould be willing to take a near 30 percent stake in Italy'sbiggest telecoms operator by folding its 3 Italia business intoTelecom and buying out controlling Telecom shareholders who aresitting on big losses on the value of their holdings.
3 Italia is the smallest of the four operators in theItalian mobile market, vying with Telecom Italia, Vodafone and Wind, but analysts reckon it could still be worth1.5 to 2 billion euros.
Under the proposals Hutchison would get shares in exchangefor selling 3 Italia but Telecom Italia said Hutchison had alsoset as a condition for the tie-up the purchase of an additionalstake in the enlarged group that would make it the leadingshareholder.
According to sources close to the situation Hutchison wouldbuy that additional stake from Telco, the consortium ofshareholders which owns 22.4 percent of Telecom Italia andcomprises Spain's Telefonica and Italy's Generali, Intesa Sanpaolo and Mediobanca.
The sources have said Hutchison is prepared to buy TelecomItalia's shares from Telco for 1.2 euros per share - thevaluation which Telco holds in its books after repeatedwritedowns which is twice the current market value.
However, sources close to Telco told Reuters on Thursdaythat a majority of the consortium's shareholders were scepticalabout the tie-up proposal, with Telefonica taking a particularlycritical stance. Telefonica is the largest shareholder in Telcoand has a right of first refusal over Telecom Italia's sharesowned by Telco.
One of the sources said it was difficult to see the businesslogic for such a deal and that a tie-up could create antitrustconcerns as the combined group would have a 46 percent marketshare in Italy's mobile market.
However, another senior source said there were divisionsamong the Telco shareholders.
FIXED LINE NETWORK
Also, it was unclear whether the enlarged group would stillinclude Telecom Italia's politically-sensitive fixed linebusiness, valued at between 12-15 billion euros.
Telecom said in its statement that its management would alsoconsider the feasibility of spinning-off the network, althoughit made no direct link between this and the Hutchison proposal.
The company has been in talks for months with Italianstate-backed fund Cassa Depositi e Prestiti over such aspin-off, which could remove a potential hurdle to any deal withHutchison.
Any decision on a deal and on the network separation isfurther complicated by Italy's political stalemate following aninconclusive election in February. The Italian treasury holds agolden share in Telecom Italia that gives it veto powers overnew shareholders and other strategic decisions.
But by merging its Italian unit into Telecom Hutchison wouldease competition pressure in the Italian market, and thecombined group could reap synergies worth 500 million euros,according to analysts.
And Bernabe is under pressure to find a way to improvereturns for his debt-laden group, which is now strugglingagainst falling margins in its crisis-hit home market as well asa cooling in its other main market, Brazil, where it competeswith Telefonica.
Telecom said Bernabe will be joined on the panel exploring apossible deal with Hutchison by directors Gabriele Galateri diGenola, Elio Catania and Julio Linares - representing Telco -along with independent director Luigi Zingales.
A source close to Telco said the panel was expected toreport back in two to three weeks.
Shares in Telecom Italia closed 1.7 percent higher at 0.6125euros.
Vodafone (VOD)