Telecom Italia Defers Decision on Shareholder Restrucuting:

Telecom Italia's board of directors has decided to set up a review of its shareholding structure, but stepped back from approving long called for changes immediately.

During the meeting, described by the company as "very fruitful", the board approved the review which will have to report back next month.

The board meeting also decided to define a procedure that will be examined next month to cover any sale of its Brazilian subsidiary. They confirmed that at this moment, there are no plans for a sale of the division.

It's expected that any such sale would be vetted by the independent directors on the board, thus negating any influence over the sale by Telefonica.

In related news, the company raised EUR 1 billion in fresh debt by selling bonds that are due to be repaid in seven years time.

Increased Pressure on Telecom Italia to Normalise its Shareholding Structure:

Telecom Italia's CEO is throwing his weight behind plans that could see Telefonica's influence over the Italian firm sharply reduced.

At the moment, a holding company, Telco has effective control over Telecom Italia as despite owning just 22.4% of the shares, can appoint four-fifths of the directors. Telefonica is the majority shareholder in Telco.

The "four-fifths" board rule has been in place since 1997, when Telecom Italia was privatized by the government.

An activist shareholder, Marco Fossati, who owns 5 percent to Telecom Italia is pushing for the shareholding structure to be normalised so that minority shareholders are not penalised by the current system. In this, he is reported to have the backing of Telecom Italia's newish CEO, Marco Patuano.

Directors gathering in Milan will start reviewing a motion by investors led by Marco Fossati to strip Telco's power to name four-fifths of board members, Bloomberg News reported, citing unnamed sources.

Brazilian Regulator Throws Spanner at Oi/Portugal Telecom Merger:

The planned merger of two of Brazil's telecoms networks may be held up after the stock market regulator blocked the two largest shareholders from setting the price of their network assets.

Brazil's Oi and Portugal Telecom had planned to use asset prices approved by their largest investors to help determine the distribution of shares in the merged company.

However, the stock market regulator ruled that this could disadvantage the company's smaller shareholders and blocked the decision. The decision was taken by technical staff and still needs to be formally upheld by the regulator, although that is usually just a formality.

The smaller shareholders have been protesting against the merger, which they claim is not being priced to their advantage. Under the terms of the deal, new shares would be issued to pay off the debts of the majority owners, but the smaller shareholders were not expected to benefit directly from that.

The upside would have been a much simpler shareholder structure though, as the structures are somewhat complex at the moment.

The merger was also seen as necessary to be completed if the two companies are to compete with their rivals, or participate in a possible break-up of Telecom Italia's local subsidiary -- if such an event were to take place.

TIM Brasil Facing Possible Break-Up to Avoid Regulatory Clash:

Spain's Telefonica is said to be working on a deal that would see the break-up of Telecom Italia's Brazilian assets to deal with regulatory concerns about is cross shareholdings in the companies.

Telefonica, which has its own mobile network in Brazil is also an indirect 15% shareholder in TIM Brasil through its indirect holding in the Italian parent company. As such, the Brazilian regulators have instructed Telefonica to reduce its holding in one of the two companies or find another local partner to reduce its influence in the local market.

According to a report by the Il Sole 24 Ore newspaper, Telefonica is looking to set up a holding company with its two main rivals in the market which would then buy TIM Brazil and split the assets between them.

The report also suggested a level of regulatory approval may exist as state-owned banks may be providing some of the financing for the deal.

Countering the proposal is the ongoing, and oft-denied rumours that Telecom Italia may sell its entire stake in the Brazilian company in order to pay down its debts. While a break-up would achieve much the same aim, it would leave Telecom Italia more vulnerable to a full take over by Telefonica later.