MILAN, May 22 (Reuters) - The Italian government is committed to safeguarding jobs and the security of Telecom Italia's fixed-line phone network, Industry Minister Flavio Zanonato said on Wednesday.
The minister's comments come ahead of a board meeting on Thursday to decide on spinning off fixed-line network assets, thousands of jobs and a portion of debt into a newly created company for an estimated value of 12 to 15 billion euros.
Telecom Italia is considering a stake sale in a yet to be created network company as well as a possible tie-up with Hong Kong-based Hutchison Whampoa - two moves that could help it reduce its 28 billion euro debt.
'The network is an asset that is strategic for the security, growth and competitiveness of the whole county,' Zanonato said in a parliamentary hearing in Rome.
The company's fixed-line network is Italy's largest telecoms infrastructure, linking millions of users from private citizens to government agencies, banks and other businesses.
'The government is strongly committed to ... guarantee the current employment levels, today ensured by Telecom Italia, and safeguard the security of the network and the technological development of the country,' the minister said.
Any separation of the fixed-line network could pave the way for state-owned fund Cassa Depositi e Prestiti (CDP) to buy a stake in the network company and help ease political concerns of the business falling into foreign hands.
Zanonato said investments by the CDP needed to be profitable and aimed at fostering growth in recession-hit Italy.
Political sensitivities, regulatory hurdles and caution among the company's core shareholders over whether such a deal would create value mean the board might not take a final decision on Thursday, sources close to the matter said.
Telecom Italia is battling against a recession at home that is squeezing its margins and endangering its targets, putting at risk its credit ratings.
On Monday, Telecom Italia Chairman Franco Bernabe met Prime Minister Enrico Letta to discuss the spin-off project. A source familiar with the matter said the process could require up to 18 months to complete.
(Reporting By Danilo Masoni; Editing by Stephen Jewkes and Helen Massy-Beresford) Keywords: TELECOMITALIA/
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