ROME/PARIS, Oct 20 (Reuters) -

European aerospace groups Leonardo, Airbus

and Thales have reached a framework deal on a

proposed merger of their satellite businesses, two sources

familiar with the matter said on Monday.

Leonardo is scheduled to hold an extraordinary board

meeting on Tuesday to discuss details of the deal, which is

subject to board and regulatory approvals, one of the sources

said.

Leonardo and Thales declined to comment. Airbus did not

immediately respond to a request for comment.

Under "Project Bromo", the three companies plan to set

up a satellite manufacturing company to compete with rivals from

China and the United States, including Elon Musk's SpaceX which

has rolled out the highly successful Starlink service.

Reuters reported last month that the three groups had

redoubled efforts to combine their satellite businesses into a

10 billion euro ($11.66 billion) joint venture.

($1 = 0.8575 euros)