An important board meeting scheduled for later in the week was cancelled by Telecom Italia, according to the people with knowledge of the situation. This cancellation buys the company time to draft a new shareholder structure which is perceived to revitalize its business after years of underperformance.

The said meeting was scheduled for September 19 and in the agenda was the discussion of the proposal of Telefonica SA to buy out the domestic shareholders of the Italian telecommunications firm. Aside from the Spanish telecommunication firm's offer, the company's directors have also declined the offers from Egyptian mogul Naguib Sawiris and Hutchison Whampoa, the Hong Kong based company.

According to reports, what is welcome for Telecom Italia would be a fresh infusion of capital to avoid the downgrade of its EUR29 billion or USD38,5 billion debt to 'junk' status. The new funds wuld also help back investments to be able to keep the company afloat despite the declining profits from its home market.

The board of directors is expected to meet again by October 3, according to two other sources. A Telecom Italia spokesperson declined to give any comment.