MILAN (Reuters) – Activist investor Elliott urged Telecom Italia’s (TLIT.MI) board to spin-off its fixed-line network, after Italy’s telecoms regulator gave an initial thumbs-down to a Vivendi plan to create a wholly-owned subsidiary instead.

AGCOM said on Sunday that the proposal drawn up by former Chief Executive Amos Genish, appointed when French media group Vivendi (VIV.PA) controlled Telecom Italia’s (TIM) board, would not reduce the power TIM has got over the market.

Elliott and Vivendi are locked in a battle over how to relaunch the debt-laden former Italian telecoms monopoly after the U.S. fund last year managed to wrestle control of TIM’s board away from top shareholder Vivendi.

The watchdog’s decision confirmed that Vivendi’s plan, in allowing TIM to retain full control of the network, did not materially change the market situation, Elliott said in a statement.

Elliott aims to separate the network into a newly created company and then sell part of it.

TIM warned last week of a fall in 2018 profit and said its domestic business would remain under pressure, reigniting tensions between its two main shareholders.

TIM shares were down 2 percent at 1110 GMT.

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