The Telecom Italia split could lead to the sale of its mobile business

But the firm declined to say whether the move would lead to the sale of its mobile business TIM.

The group also announced it had signed a media content deal with Fox networks to boost its internet offering.

Telecom Italia also said net profits fell 15.7% to 1.5bn euros ($1.78bn; �953m) in the first half of the year.

Analysts have suggested the shake-up at Telecom Italia is likely to lead to the sale of its mobile operator TIM (Telecom Italia Mobile).

Telecom Italia bought the business in 2005 after previously selling it off in the 1990s. Experts suggest it could be worth up to 35bn euros (�23.7bn).

Split strategy

Chairman Marco Tronchetti Provera said the firm intended to hold onto 100% of the two companies, but he added it would be his "duty to examine any possible offer" for the businesses.

He added the firm had taken steps to split its mobile and fixed line activities in an effort to cut back on litigation and regulation covering Telecom Italia, as well as improving its ability to launch new products.

Selling TIM would mark a major turnaround for Telecom Italia, which has recently been integrating its mobile and fixed-line phone operations.

Separate reports have suggested that rival European telecoms firms including France Telecom, Deutsche Telekom, and Spain's Telifonica - as well as US private equity firm The Carlyle Group - could be interested in buying TIM.

Telecom Italia is Italy's largest phone company, holding almost 70% of the market, and is the leading mobile operator in Brazil as well as Italy.