Telecom Italia (TI) chairman, Marco Tronchetti Provera, was told by the company’s board this week to “explore all the possible options” for its 80 percent stake in Olimpia, including a sale.

According to local reports, he and Capitalia SpA’s chairman, Cesare Geronzi will meet Wednesday to discuss the possibility of selling Pirelli’s stake in TI to an Italian consortium.

The news daily, La Repubblica, said Wednesday that a consortium of Italian banks is prepared to buy Pirelli’s 80 per cent stake in Olimpia, which controls 18 per cent of Telecom Italia.

When Pirelli took over TI in 2001 it was worth Eur 4.2 per share. At close of play Tuesday, it was worth Eur 2.17. In a bid to stabilise the firm, Pirelli is known to have been seeking a strategic alliance with Spain’s Telefonica. That could include Telefonica buying a minority stake in Olimpia.

According to La Repubblica however, the banks could offer to buy at Eur 2.6 – 2.7 per share, with the possibility of paying more in the future through an adjustment mechanism if TI’s share value goes above Eur 3.

The paper reported that Pirelli is reluctant to sell at less than Eur 3 per share.

Behind the boardroom negotiations, the Italian government is worried that too much control is being held by foreigners in the country’s telecoms sector. That has been exacerbated by Swisscom’s recent bid for FastWeb. Wind, Voadafone and Hutchsion are all foreign controlled and there is speculation that Hinduja of India is interested in TI. Russian player, Sistem, has also been suggested.