The board of Telecom Italia has agreed to spin off its fixed-network unit, a move that could reduce regulatory barriers to a potential merger with Hutchison Whampoa’s mobile unit in Italy.

The company’s chief operating officer, Marco Patuano, said a possible deal with Hutchison will now be on the agenda for the next meeting of Telecom Italia’s board, according to Reuters. This is expected to take place next week.

The potential deal with Hutchison, a foreign operator, has led to political concerns in recent months.

Politicians have talked about the strategic value to the country of Telecom Italia’s fixed telecoms infrastructure. The current move would neutralise this line of argument.

The board’s decision will enable the Italian incumbent to put its fixed, local network assets into a new company and then a sell a minority stake in the venture to an outside partner.

The favourite to fill that role is the country’s state lender Cassa Depositi e Prestiti (CDP).The board also authorised talks with CDP to continue.

The possibility is for CDP to take 30 per cent in the new fixed venture, which has the working name of Opac, according to Bloomberg.

The assets are worth approximately $18 billion, so a sale would raise some valuable funds for Telecom Italia.