NEW YORK (TheStreet) Telecom Italia (TI) late Thursday, Jan. 16, said it would create guidelines for handling any offers for its Brazilian unit and would review its corporate bylaws amid shareholder and regulatory apprehension over its relationship with larger rival and key shareholder Telefonica (TEF.)

Following a board meeting, the Italian company said both moves would discussed at a Feb. 6 directors' gathering.

Telecom Italia at a December meeting narrowly defeated a shareholders' attempt to replace the board with executives less sympathetic to Telefonica. The Spanish phone giant is increasing its influence by gradually buying out partners in a venture that holds 22% of Telecom Italia.

The rebel shareholders, led by the Findim Holding SA investment vehicle of Italian financier Marco Fossati, gained the support of 42.3% of the capital present at the meeting.

Findim is Telecom Italia's third-largest shareholder with about 5%.

Both Telefonica and Telecom Italia's 32.9 billion reais ($14 billion) TIM Participacoes SA business in Brazil are at the center of the kerfuffle. Telefonica CEO Cesar Alierta wants Telecom Italia to part with the 67%-owned TIM Participacoes and even forced the resignation of former Telecom Italia CEO Franco Barnabe, who favored a share sale over a divestment of the asset.

Despite setting the groundwork for a potential sale of the Brazilian division through the guidelines it plans to establish, Telecom Italia on Thursday said it was not currently involved in any "projects, negotiations or offers on the matter."

It's not only shareholders who are irked at Telefonica's role at Telecom Italia. Brazil's Cade competition regulator has also fined both companies and said it wants either the Spanish company to have Telecom Italia sell TIM Participacoes or to find another partner for its own majority-controlled Vivo Participacoes SA unit, which is Brazil's biggest wireless services company.

For its part, Telefonica has also made moves to appease both shareholders and Cade. In December CEO Alierta and ally Julio Linares resigned from Telecom Italia's board to remove the conflict of interest.

Telecom Italia on Thursday said it wouldn't replace the executives, waiting instead until the entire 11-member panel's term expires in April.

Telecom Italia shares were slightly lower at 0.841 in morning Milan trading.

--Written by Andrew Bulkeley in New York