MILAN - Shares in Telecom Italia (TIM) fell as much as 9% on Thursday after a report suggesting the government led by Mario Draghi is set to drop a plan drafted by its predecessor to create a single ultra-fast broadband network for the country.

Rome has been trying to create a national network by merging state-backed Open Fiber with the whole of TIM's fixed access network assets to speed up fiber rollout across the country and close its digital gap with the rest of Europe.

But la Repubblica daily said on Thursday Draghi's government would not support the single network plan, citing an informal European Commission warning that it would reduce wholesale competition.

Italy's recovery plan submitted to the European Commission, refers to "broadband networks", plural, suggesting that the single network plan has been set aside, daily La Repubblica reported.

Both the Italian government and TIM declined to comment.

"If confirmed, it would be negative news for TIM," broker BestInver said, saying that the alternative solutions the government is exploring would be less beneficial for the former phone monopoly than the creation of a single network.

Telecom Italia shares were down 5.6% on the Milan bourse at 1000 GMT, the worst performing stock on the Italian blue-chip index.

Under the previous government's plan, TIM could initially own more than 50% of the new single network if justified by the value of its assets folded into it. But equal access would have to be granted to all market players.

Under that plan, the new entity, called AccessCo, could be eligible for billions of euros of EU Recovery Fund money to upgrade the country's network.

The final say on the network's strategic issues would lie with state lender Cassa Depositi e Prestiti (CDP), which is also TIM's second largest shareholder and is set to take control of Open Fiber later this year.

TIM has repeatedly said it would not agree to owning less than 50% of any combined entity with Open Fiber.

Ministers in Draghi's government have publicly cast doubt over the plans. 

Sources have told Reuters the government was looking at alternatives to speed up the broadband rollout, including a less ambitious plan to merge Open Fiber with Fibercop, a vehicle controlled by TIM that runs the group's secondary network going from street cabinets to homes. 

Italy's ruling parties have also been discussing a plan to pull together all the country's telecom operators in a consortium to speed up the rollout of ultra-fast infrastructure nationwide, a document seen by Reuters showed.

(Reporting by Elvira Pollina and Angelo Amante, additional reporting by Giancarlo Navach Editing by David Goodman and Jane Merriman) ((elvira.pollina@thomsonreuters.com;))