MILAN (Reuters) - Telecom Italia
In response to the unsourced report in newspaper Il Messaggero, Telecom Italia said the issue of a capital increase was not on the agenda of its board meeting on Thursday.
The statement failed to reassure investors and at 0939 GMT its shares were down 5.2 percent at 0.515 euros.
Telecom Italia's margins have been eroded by tough competition and a deep recession in Italy, weighing on its share price and making it harder to cut more than 28 billion euros ($37 billion) of net debt.
After the collapse of tie-up talks with cash-rich Hutchison Whampoa <0013.HK> and Egyptian tycoon Naguib Sawiris earlier this year, Telecom Italia needs to find resources to cut its debt and fund investments in growth areas.
Analysts have said a cash call or a possible sale of its Brazilian unit Tim Participacoes
Small investors association Asati said on Wednesday it had called on the company's board to decide on capital strengthening measures to present to shareholders by the end of December.
Its core shareholders - Telefonica
"A capital increase would not be very appealing at all unless it was part of a broader strategic plan," Zenit fund manager Stefano Fabiani said. "I don't think the core shareholders would be interested in taking up a capital hike."
The Messaggero said writedowns of up to 2 billion euros were expected to result in a first-half loss. ($1 = 0.7547 euros)
(Reporting by Danilo Masoni and Stephen Jewkes; Editing by Erica Billingham)
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