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Telecom Italia on Thursday moved to calm speculation of turmoil in its executive suites, saying it was proceeding with a previously outlined strategy, and that all its business units would be reporting to the current chief executive.

The extraordinary statement follows persistent media reports that Riccardo Ruggiero, who only became chief executive in October last year, was on the verge of quitting amid intense debate over crucial strategic decisions.

People close to the company acknowledge there have been disagreements over the future management of the company’s divisions and the possible sale of operations in Brazil. However, they add that talk of Mr Ruggiero’s departure has been exaggerated.

The company said its organisational model would “be based on four business units – fixed, mobile, network, top business clients – directly reporting to Mr Ruggiero who in turn reports to the vice-chairman Carlo Buora”.

Telecom Italia is due by March to spell out its new industrial plan. After that, the board is to be re-elected in April. Further personnel changes might be expected then, the people added.

Telecom Italia was first plunged into disarray in September when it announced plans to split itself into three, possibly as a prelude to a sale of some large assets, and to concentrate on broadband and media services which it sees as fast-growing and profitable.

The possible sale of Telecom Italia Mobile also caused a deep rift with the government of Romano Prodi.

Marco Tronchetti Provera quit as the row with Mr Prodi became personal. Mr Tronchetti remains chairman of Pirelli, the tyre company which is Telecom Italia’s dominant shareholder.

Guido Rossi, who had been chairman of Telecom Italia during its privatisation in the 1990s, took over as chairman again and has been focused on calming the situation.

The board soon decided to rein back on the separation. Talk of selling the mobile unit was dropped although discussions continued with possible buyers of the Brazil operations.

Mr Buora, who also held high office at both Pirelli and Telecom Italia, quit Pirelli to concentrate on the job of executive vice-chairman at the telecoms group. Reports have suggested that much of the heated debate has been between Mr Buora and Mr Ruggiero.

One senior manager has left since Mr Rossi’s arrival. Riccardo Perissich, a highly experienced European businessman, left his post as head of institutional affairs. He was replaced by Franco Brescia who worked with Mr Rossi when he ran Teleocm Italia in the past.

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