* Board meets to decide on possible exit from Argentina
* Sawiris still interested in investing in Telecom Italia
* Italian official says met with U.S. businessman Trujillo
* Telecom director says cash injections are welcome
(Adds board member comments on cash injection)
By Alberto Sisto and Paolo Biondi
ROME, Sept 26 (Reuters) - Renewed signs of foreign bid
interest in Telecom Italia emerged on Friday just as
its board met to discuss the company's options after hitting
setbacks in its South American businesses.
At the top of the meeting's formal agenda was the sale of
its controlling stake in Telecom Argentina to
investment company Fintech -- a $960 million deal the Italian
group agreed nearly a year ago which is now in doubt because it
has not yet been cleared by regulators.
However, the bigger issue at Telecom Italia is how the
company contends with the increasing pace of industry
consolidation as telecom companies seek to bring together fixed
and mobile services, both in Europe and in Brazil, where it
controls the country's second-biggest mobile operator, TIM
Participacoes.
On Friday the head of an Italian company controlled by
Naguib Sawiris, the Egyptian tycoon and former owner of Wind,
Italy's third-biggest mobile operator, said he was still
interested in investing in Telecom Italia, despite having an
offer rejected in 2012 to buy a stake for 3 billion euros.
Adding to the air of intrigue around European's ninth
largest telecoms group, Raffaele Tiscar, a top official at the
Italian prime minister's office, said he had met U.S.
businessman Sol Trujillo to discuss Telecom Italia.
On Thursday a report by Bloomberg said Trujillo, the former
chief executive of Australian telecoms group Telstra, is
seeking to raise 7.5 billion euros to bid for a stake in the
Italian group.
"I've seen Trujillo as I see many others," Tiscar told
Reuters.
A senior investment banker said it was not the first time
Trujillo had moved to approach Telecom Italia, but doubted that
this would translate into a serious proposal.
Telecom Italia's increasingly fragmented shareholder base is
making it a more vulnerable takeover target.
"That Telecom is up for grabs is clear," a government source
said on Friday. "It could even happen rather quickly."
Board member Tarak Ben Ammar, on his way out from the board
meeting, said Telecom Italia is not up for sale, although
whoever brings in cash is welcome. On Trujillo's possible bid
plan, he said: "That is a proposal that probably comes from
Disneyland in the sense that we don't know anything about it".
FROM HUNTER TO PREY
Telecom Italia, which owns 67 percent of Brazil's second
biggest mobile network operator, TIM Participacoes,
has been forced to regroup after losing out to Telefonica
, owner of bigger Brazilian rival Telefonica Brasil
in the $9 billion bidding battle for Vivendi's
telecoms business in Brazil, GVT.
Burdened with more than 27 billion euros of net debt and in
need of cash to carry out costly network upgrades and lacking a
clear direction, Telecom Italia has now turned from hunter to
potential prey again, several investment bankers have told
Reuters.
However, that is not an unfamiliar scenario.
Its board has rejected approaches both from Sawiris and Hong
Kong's Hutchison Whampoa in the past two years.
And a year ago sources told Reuters that ATT and
Mexican billionaire Carlos Slim's America Movil -- who
had already unsuccessfully tried to take over Telecom Italia in
2007 - could be interested in taking a stake.
Meanwhile the shareholder structure is changing.#
Telefonica, which is still Telecom Italia's largest indirect
shareholder with a 14.8 percent interest, is selling out, with
an 8.3 percent stake going to Vivendi as part-payment for GVT,
and the balance covered by an exchangeable bond which Telefonica
sold earlier this year.
In addition, a group of Italian financial institutions have
also said they will sell their stake in Telecom Italia, which
amounts to a combined 7.6 percent.
ARGENTINA EXIT?
The sale of Telecom Argentina to Mexican billionaire David
Martinez's investment company Fintech, agreed last November, has
stalled because of regulatory uncertainty.
Telecom said late on Thursday that Fintech had asked for a
further extension on the deal in a last-minute attempt to
prevent it from falling apart.
An initial August deadline to complete the sale has already
been pushed back twice and Telecom Italia's CEO Marco Patuano
has signalled he is running out of patience.
A group of small investors said on Friday the company should
hang on to its stake in Telecom Argentina, reflecting growing
unease among shareholders about the planned exit.
Failure to complete the sale would leave the incumbent with
less cash to invest in faster networks and 4G services, a major
plank of Patuano's strategy.
(Additional reporting by Danilo Masoni, Stefano Rebaudo,
Stephen Jewkes and Elisa Anzolin in Milan and Sophie Sassard in
London; Writing by Silvia Aloisi; Editing by Keith Weir and Greg
Mahlich)