Telecom Italia has confirmed that Marco Patuano will quit as CEO amid disagreements over strategy with shareholder Vivendi and ongoing operational difficulties at the company.

In a brief statement on its website, the Italian phone incumbent said it was in "advanced negotiations on… Patuano's resignation."

"Negotiations are ongoing with the Chief Executive Officer aimed at the definition of an agreement -- to be submitted to the relevant corporate bodies -- on the consensual suspension of the offices held by the CEO within the Group," said the operator's statement.

According to media reports over the past few weeks, Patuano has clashed with several board directors appointed by Vivendi -- which owns 25% of Telecom Italia -- and demanding that Telecom Italia be more aggressive on cost cutting.

Chairman Giuseppe Recchi is poised to take over Patuano's responsibilities on an interim basis until a permanent replacement has been found, according to the Wall Street Journal, citing sources familiar with the matter.

Last month, Telecom Italia revealed that its revenues had fallen by 4.6% in 2015, on a constant-currency basis, to €19.7 billion (US$22.2 billion), with EBITDA dropping by 17.9%, to around €7 billion ($7.9 billion).

The operator has unveiled plans to accelerate capital expenditure investments in the rollout of fiber-optic and 4G networks, hoping this will spur future growth, but its balance sheet position remains troubling. (See Telecom Italia Accelerates FTTx, 4G Investments and Telecom Italia to Invest €3B in Fiber to Spur Growth.)

Net financial debt was nearly four times EBITDA last year, with most European incumbents looking to maintain a ratio of between two and 2.5.

As forecast, Telecom Italia's cash flow fell sharply last year, from about €3.2 billion ($3.6 billion) in 2014 to just €2 billion, and is not expected to exceed the 2014 figure until 2017.

But investors are clearly concerned that Telecom Italia will struggle to pull off a turnaround. The company's share price is currently trading 18% lower than in late October -- when it was at its zenith over the last 12 months -- although it has risen by 27% since February 16, the day before it announced its latest strategic plan and 2015 results.

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On an encouraging note, Telecom Italia heralded a return to growth in Italy's consumer mobile market last year, with revenues edging up by 0.8%, to €3.6 billion ($4.1 billion).

Nevertheless, overall domestic revenues fell by 2.4%, to €13.9 billion ($15.7 billion), while EBITDA was down by 21.9%, to about €5.3 billion ($6 billion).

Along with other European incumbent operators, Telecom Italia has found it hard to lay off staff given the power of trade unions in its domestic market. In mid-February it was revealed to be targeting voluntary redundancies for around 3,300 workers in Italy, and looking to slash another 250 jobs, but this represents only about 8% of its Italian workforce.

Outside Italy, the operator's biggest market is Brazil, where it has been hit by a mixture of competitive, economic and regulatory pressure.

In local currency terms, revenues from Brazil fell by 12.1% in 2015, to 19.5 billion Brazilian reais ($5.4 billion). Telecom Italia blamed cuts to mobile termination rates and falling usage for the setback.

In January, Telecom Italia's Brazilian unit was reported to be in discussions with rival Oi about a merger that could help to reduce price-based competition and create a much stronger local player.

Longer term, Telecom Italia is trying to adapt its business to cope with challenges from Internet players and new digital realities, but a leading executive admitted the organization was "not ready" for that transformation during a recent conference in Paris. (See Telecom Italia Not Ready to Transform, Admits Exec.)

Patuano has been CEO of Telecom Italia since April 2011, having previously worked as CFO and head of the operator's domestic business.

UPDATE: Telecom Italia issued a statement at 9.20 a.m. EST indicating that: "Marco Patuano today handed in his resignation, which will become effective subject to the relevant corporate bodies' approval of the pertaining terms and conditions."

At the same time, the operator's share price was trading up around 3.1% on the Milan stock exchange.

— Iain Morris, , News Editor, Light Reading