Telecom Italia denied it is in discussions to sell its operations in Brazil, following reports that it is considering the move to reduce debt.

The beleaguered operator group said “there is no formal or informal process ongoing for the disposal of its interest in TIM Partecipaçoes”.

Telefonica, which recently boosted its stake in Telecom Italia, reportedly favours selling the Brazilian unit to raise cash.

Bloomberg reports Telecom Italia’s debt is €29 billion, more than double its market value.

Former Telecom Italia CEO and chairman Franco Bernabe, who resigned last week, was believed to have opposed the sale of assets in Latin America, instead favouring a capital increase and a spin-off of Telecom Italia’s fixed network in Italy.

The company’s acting CEO Marco Patuano is reported to have said an updated business plan for the company will be presented at a board meeting on 7 November.

The future of TIM Partecipacoes and Telecom Argentina will be outlined in the plan, along with a possible restructuring of the business in Italy. Patuano added that the company will only restructure its domestic business if it creates value for the company.

Moody’s Investors Service yesterday downgraded Telecom Italia’s debt to junk status, blaming the company’s failure to strengthen its balance sheet and the recent resignation of Bernabe.

In response to the downgrading, Telecom Italia released a statement to demonstrate its solid position, pointing to cash-flow generation of €32 billion and a €7.6 billion reduction in its net financial position over the past five years.