MILAN (Reuters) - Shareholders representing less than half of Telecom Italia's (>> Telecom Italia S.p.A.) capital showed up to their annual meeting on Wednesday, a possible sign that discontent over its management is not deep enough to spark a shareholder revolt.
But the board of the debt-laden former monopoly was expected to face protests from investors uneasy over its performance and strategy.
Telecom Italia's share price has tumbled close to an all-time low as Chairman Franco Bernabe battles to resolve a deadlock over its future plans and tension caused by an ownership structure that gives core investors holding less than a quarter of the stock effective control over the company.
Management is casting round for ways to cut a mountain of debt and hang on to Telecom Italia's credit rating as recession bites into profits at home in Italy and growth slows in its key market of Brazil.
As the meeting began, investors representing 44.4 percent of the company were present, leaving the core investors - Spain's Telefonica (>> Telefonica SA) and a trio of Italian financial institutions - in the driving seat.
That group of companies, known as Telco, has a stake of about 22.4 percent.
On Wednesday, retail investor association ASATI renewed a request to change the company's bylaws in order to give larger board representation to minority investors.
"A lot of people are missing" from the meeting, said Franco Lombardi, the head of ASATI, which represents about 0.5 percent of Telecom Italia's share capital.
He renewed a call to give the minority investors greater board representation and called on foreign investors to back him.
The meeting, due to vote on 2012 results and an executive pay package, comes as speculation continued over a possible tie-up with Hutchison Whampoa (>> Hutchison Whampoa Limited) which would give the Hong Kong conglomerate control over Telecom Italia.
Telecom Italia last week appointed a panel of directors, including group chairman Bernabe, to consider the proposed tie-up, which envisages a merger with Hutchison's Italian mobile phone unit 3 Italia.
Shares in Telecom Italia rose on Wednesday after a report said that 3 Italia was less profitable than previously thought.
"Any deal for 3 Italia would be paper and cash, and with the report saying the unit is worth less than thought, the market is hoping the cash element will be more," a Milan trader said.
But such a deal could face stiff political opposition given that Telecom Italia controls Italy's main telecom network, widely viewed as a strategic national asset.
At 1037 BST Telecom Italia shares were up 0.6 percent at 0.6145 euro while the European telecoms sector <.SXKP> was down 0.19 percent.
(Reporting by Danilo Masoni and Stephen Jewkes; Editing by Francesca Landini and Tom Pfeiffer)