ROME, June 16 (Reuters) - Italy's antitrust regulator said competition was key in fixed-line telecoms, even if that meant a costly separation of the network, prompting Telecom Italia to say it has already taken steps to open up its grid.
The Italian competition authority has suggested a part sale of Telecom Italia's network, but the country's former monopoly and largest operator, which relies on the grid for the bulk of its earnings, has repeatedly ruled out such a move.
"We know that separating the network from services is costly, but competition is the main thing for us," antitrust chief Antonio Catricala said in his annual speech before parliament on Tuesday.
Telecom Italia, controlled by a group that includes Spain's Telefonica, has created a new division called Open Access, to independently manage the group's network separately from its services business.
That move was approved by telecoms regulator AgCom in December as sufficient to encourage competition, after more than a year of wrangling.
But the antitrust authority has pushed for more.
"There will be no access nor expansion if incumbents' interests always prevail, if we don't give confidence to new investments, if each time we choose the less-destabilising solutions to preserve the current situation," Catricala added.
European regulators see functional separation as a strong option to boost competition in local telecoms markets and cut prices for customers.
Telecom Italia Chairman Gabriele Galateri di Genola said on Tuesday the company supported a competitive market.
"I think our decisions, particularly concerning our Open Access division, are a clear demonstration of our intentions to work in an open and efficient way," he said on the sidelines of Catricala's presentation.
British telecoms provider BT underwent a similar separation of its operations in 2005 to fulfil regulators' demands.
An Italian government adviser recently suggested the spin-off of the group's fixed-line network as one of three options to spur Italy's broadband growth.
Telecom Italia Chief Executive Franco Bernabe has said any government intervention to force the company to sell the network would be illegal.
Italy's government has also made clear Telecom Italia's fixed-line network has to remain Italian.
There have been reports that Telefonica would be interested in a merger or takeover of Telecom Italia and an industry source said last month that if this was on the table, the question of selling the network would reopen.
Shares in the phone company were off 0.53 percent at 0.936 euro. The DJ Stoxx telecoms index was 1.1 percent higher. (Reporting by Alberto Sisto; Writing by Antonella Ciancio; Editing by Rupert Winchester) ((antonella.ciancio@reuters.com; +39 02 6612 9652; Reuters Messaging: antonella.ciancio@reuters.net))