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UPDATE 1-Telecom Italia offers some flexibility on single network

(Adds comments, background)

MILAN, Aug 20 (Reuters) - Telecom Italia (TIM) won’t accept less than 50% of any single broadband network but is ready to show flexibility on issues such as governance and regulation, its CEO said in an interview published on Thursday.

The Italian government is trying to broker a deal between former phone monopoly TIM and smaller rival Open Fiber to merge their fibre assets and create a national champion.

But differences over issues like governance and regulation have created a deadlock.

In an interview with Italian daily La Repubblica, Chief Executive Luigi Gubitosi said ideas such as TIM having a majority of the capital in a single network but only a minority of board seats, or creating different kinds of voting and non-voting shares made no sense.

“We can, however, consider governance arrangements such as qualified majority for certain decisions,” he said.

He declined to give further details, saying TIM had recently sent its position on the matter to state lender Cassa Depositi e Prestiti (CDP) and was waiting for an answer.

CDP, which jointly controls Open Fiber with utility Enel , is TIM’s second-biggest shareholder after Vivendi .

TIM, which has both a retail and a wholesale arm, has repeatedly said it wants to keep control of any merged entity with Open Fiber, while European regulations favour the adoption of a non-vertically integrated model outside TIM’s control.

Earlier this month, TIM postponed to Aug. 31 a decision on the sale of a minority stake in its last-mile grid to U.S. investment firm KKR on a government request to negotiate a deal with Open Fiber.

Gubitosi told La Repubblica TIM was ready to agree to a regulation of the single network that went further than the model used by Openreach in Britain, “allowing decisions, strategies and aims to be shared like no other incumbent does”.

“We do not exclude going beyond the English public model which today, with Openreach, is considered the most autonomous and independent,” he said, but declined to give details.

Openreach is a wholly-owned subsidiary of BT which runs Britain’s nationwide broadband network as a legally separate entity. (Reporting by Stephen Jewkes; Editing by Mark Potter)

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