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Telecom Italia SpA (TI) controlling shareholder Telco said Thursday it wrote down its 24.5% stake in Italy's largest telecoms operator, posting a first-half loss of EUR1.5 billion.

In a statement, unlisted holding company Telco - which groups Italian banks Mediobanca (MB.MI) and Intesa Sanpaolo (ISP.MI), insurer Assicurazioni Generali (G.MI), the Benetton family and Spain's Telefonica (TEF) - said the value of its investment in Telecom Italia was written down by EUR1.395 billion.

After Telco's long-awaited write-down, Telecom Italia shares are now booked at EUR2.2 each, against a current market value of EUR0.99.

Telefonica and the four Italian investors which together bought control of Telecom Italia in April 2007, had said in July they had lost about EUR5 billion on their initial investment in Italy's phone operator.

Since the Telco deal was sealed, Telecom Italia's share price has fallen about 60%, as first a lack of clarity over management and then concerns over strategy weighed. The price fall had already forced Telco to pledge all of its 24.5% stake in Telecom Italia as a guarantee for outstanding loan obligations.

"Writing down the shares at EUR2.2 is definitely just a first step by Telecom Italia investors. We're still too far from the current stock price," a Milan-based asset manager said.

In its statement Thursday, Telco also confirmed it will oppose the ruling by Brazil's market regulator that would force it to launch a tender offer for minorities in Telecom Italia's Brazilian mobile unit TIM Participacoes SA (TSU).

Telecom Italia holds 81.3% of ordinary shares in TIM Participacoes, Brazil's third-biggest mobile-phone operator and one of the Italian phone group's core markets.

A buyout of the minorities in TIM Brazil could cost Telco's shareholders up to EUR500 million, according to analysts' estimates based on the ordinary shares' value.

-By Giada Zampano, Dow Jones Newswires; +39 06 6976 6925; giada.zampano@dowjones.com

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