Telecom Italia turned its back yesterday on the "convergence" strategy that management had been espousing for two years, announcing plans to split the company's mobile phone business from its media and residential broadband operations.

While Telecom Italia stopped short of announcing plans to sell off its mobile arm to pay some of its €40bn (£27bn) debt, the move will generate interest from rivals and private equity buyers. Telecom Italia's mobile division could fetch up to €35bn and attract buyers including Permira, Apax, Carlyle and Telefónica, which owns O2.