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Challenger plan for Telecom Italia includes 16 billion euros in asset sales

FILE PHOTO: The Tim logo is seen at its headquarters

ROME (Reuters) -The sale of Telecom Italia's (TIM) domestic retail operations and Brazilian unit could raise at least 16 billion euros ($16.96 billion), a former senior executive of the phone group said in an interview published on Thursday.

The suggested sales are key planks of a revamp plan put forward by former TIM deputy general manager Stefano Siragusa and London-based investment firm Merlyn Advisors, who together own under 3% of TIM.

Merlyn and Siragusa are challenging TIM's plan to sell its landline grid to U.S. fund KKR.

The grid sale is backed by Giorgia Meloni's conservative government, which has authorised the Treasury to buy a 15-20% stake in the asset it deems strategic.

Sources have previously said KKR's offer is worth 23 billion euros, including debt and a future potential conditional payment worth 2 billion euros.

TIM directors will on Friday kick off a review of KKR's binding bid for TIM's most valuable asset, which is at heart of CEO Pietro Labriola's plan to turn around the debt laden former phone monopoly.

Siragusa, meanwhile, told Il Sole 24 Ore newspaper that "we want to streamline TIM's domestic consumer business and sell its various operations to get at least 9 billion euros".

He also said he would expect to raise at least 7 billion euros from the sale of TIM's 67% stake in its Brazilian carrier, which is worth some 4.6 billion euros at current market price.

Intesa Sanpaolo analyst Antonella Frongillo called the suggested valuations "ambitious", while Banca Akros' Andrea De Vita valued TIM's domestic operations at just above 4 billion euros.

Any deal involving TIM assets is also subject to government scrutiny under "golden power" regulation, which allows Rome to block any transaction or set terms for it.

TIM's top investor Vivendi, which has voiced major reservations about the sale of the fixed line network, has called on the board to fully examine Merlyn and Siragusa's so-called TIMValue proposal before any decision on the grid, a letter dated Nov. 1 and seen by Reuters showed.

"The real issue is to involve as many shareholders as possible in a project different from that proposed by management", the former executive said.

In the letter Vivendi criticised TIM's decision to not involve the phone group's internal related parties committee on the KKR grid deal, and reiterated it was ready to challenge the board in court without a shareholder vote on the matter.

"We note an exacerbation of the overall situation and an increasing risk of a legal dispute ahead," Intesa's Frongillo said in a research note.

($1 = 0.9436 euros)

(Reporting by Giulia Segreti and Elvira Pollina, editing by Tomasz Janowski, Kirsten Donovan)