(Updates throughout after Swisscom-Vodafone deal)

By Supantha Mukherjee and Olivier Sorgho

STOCKHOLM, March 15 (Reuters) - Swisscom's

agreement to buy Vodafone Italia for 8 billion euros

($8.7 billion) is the latest attempt by a European telecom

company to boost its prospects through consolidation, divesting

assets, or selling stakes to investors.

Weighed down by billions of euros of debt, European telecom

companies operate in small, highly competitive markets, unlike

their peers in other regions, making it difficult for them to

find growth.

The following outlines their limited options.

CONSOLIDATION

European telcos have for years fought regulatory hurdles

that prevent mergers.

Many countries have four mobile operators jostling for share

in small markets, which usually equates to lower prices for

consumers but less profit for the companies, analysts say.

Mergers would reduce the number of operators, and regulators

are concerned that could lead to higher prices, less choice and

lower quality for consumers, particularly if two local players

join forces in one market.

The Swisscom and Vodafone ( VOD ) deal would create Italy's

second-biggest fixed-line broadband operator behind Telecom

Italia (TIM).

Bouygues Telecom, a unit of French conglomerate Bouygues

, last month signed an exclusivity agreement with La

Poste to buy its telecoms unit for 950 million euros ($1.03

billion). If finalised, the deal would reduce competition in the

French market.

Earlier this week, Spain's government authorised an 18.6

billion euro merger between French mobile operator Orange's

Spanish business and its rival MasMovil.

The deal, which received EU antitrust clearance in February,

has been viewed in the sector as a test case of whether Europe's

antitrust regulators have become more lenient in approving deals

that reduce the number of operators.

Analyst Paolo Pescatore at PP Foresight told Reuters they

arguably had not. He said the complementary nature of both

businesses meant Swisscom-Vodafone had a greater chance of

getting clearance, while the Orange-Masmovil deal was only

approved on the condition that a stronger player would emerge in

the mobile network market.

Britain's antitrust watchdog in January launched an

investigation into the $19 billion merger between Vodafone's ( VOD )

UK operation and CK Hutchison's ( CKHUF ). It is due to

provide an update later in March.

SELLING ASSETS

In the last few years, telecom firms have sold non-core

assets such as mobile tower businesses to raise cash.

American Tower ( AMT ) and Cellnex spent billions

of dollars in buying up the mobile masts. Spain's Telefonica

received 7.7 billion euros for selling its towers

business.

Companies are now trying to shed businesses closer to their

main operations.

Vodafone ( VOD ), the third telecom player in Spain after

Telefonica and Orange, is set to sell its Spanish business to

London-listed Zegona Communications for 5 billion euros.

Former phone monopoly Telecom Italia (TIM) is selling its

fixed-line network to U.S. fund KKR in a deal worth up to 22

billion euros.

FOREIGN FIRMS BUY STAKES, GOVERNMENTS SCRUTINISE

European telecoms' struggles have given Middle Eastern

telecom companies an opportunity to build presence in the

region.

Between Saudi telecoms group STC and UAE's e&,

they have spent over 5 billion euros in four deals in Europe in

the last year.

Some governments have increased their stakes in telecom

companies to offset growing foreign ownership.

In response to STC announcing in September it had built up a

9.9% interest in Telefonica, Spain's government in

December said it would acquire up to 10% through the state

holding company SEPI.

Britain said in January it had put in place "proportionate

measures" to alleviate its national security concerns about the

relationship between Vodafone ( VOD ) and Abu Dhabi-based telecoms group

e&, having earlier cleared the state-controlled company's 14.6%

stake in Vodafone ( VOD ).

($1 = 0.9184 euros)