Shares in Telecom Italia fell 3.9 percent in strong volume, after traders cited a newspaper report which claimed the operator is considering cutting its dividend, Reuters reports. An unsourced report in Italian newspaper Il Messaggero said Telecom Italia executive chairman Franco Bernabe had proposed cutting the dividend payment to EUR 900 million from EUR 1.2 billion at a board meeting on 19 January. This is due to required investments in Telecom Argentina and the LTE frequency auction, as well as lower cash flow due to the weaker Italian economy. No final decision on the dividend has been taken yet. Telecom Italia issued a statement in response, saying the board will take a decision on the dividend when it discuses the financial results on 29 March. The company did disclose that at the meeting of 19 January, the board agreed to give "absolute priority" to debt reduction and maintaining the credit rating, following the recent downgrade in Italy's sovereign ratings.
